Summary of Baidu's Key Business Insights Company Overview - **Company**: Baidu - **Date of Report**: 26 September 2025 - **Industry**: Emerging Internet in China Core Business Insights 1. Stock Re-rating and Value Unlocking - Baidu's stock has been positively re-rated due to a more favorable outlook on capital structure and value unlocking initiatives, including potential listings for Robotaxi and other ventures. The estimated value of Baidu is approximately **US$150/share**, with **US$100** from core businesses and **US$50** from new ventures like Robotaxi and net cash/investments [1][5][9]. 2. Core Search Business - The core search business is expected to recover with a revamped AI product, projecting **RMB61 billion** in revenue for 2026, a **1% YoY decline**, and an EPS of **USD6.1**, valued at **USD17 billion** or **USD50 per share** based on an **8x PE** multiple [2][10]. 3. AI Cloud Business - Baidu AI Cloud, the only pure-play AI cloud provider in China, is projected to grow by over **20% YoY**, with revenues of **RMB34 billion** in 2026 and a **15% operating margin**. The business is valued at **USD17 billion**, equating to **USD50 per share** at a **25x PE** multiple [3][29]. 4. Robotaxi Business (Apollo Go) - The Robotaxi segment is not expected to contribute revenue until around **2030**, but Baidu is positioned as a leader with significant investments. The potential revenue is estimated at **USD900 million** in 2030, with a current value of **USD7 billion** based on a **30x PE** multiple [4][44]. 5. Total Valuation and Future Growth - A sum-of-the-parts (SOTP) analysis values Baidu at **USD47 billion** or **USD150 per share**, with potential to reach **USD61 billion** or **USD200 per share** under more optimistic assumptions [5][9]. Challenges and Risks 6. Growth Sustainability - The company faces challenges in sustaining a **15% growth** across its asset value, particularly with the core search business needing more time to show positive earnings trajectories. The cash portion remains a drag, and expectations for the Robotaxi business are high, which may not offset stagnant cash reserves [6]. 7. Market Share Loss - Baidu has been losing market share to short-form video platforms, with a strategic pivot to AI search content impacting traditional search monetization. The online marketing revenue is expected to decline by **15% YoY in 2025**, but is projected to stabilize and recover in 2026 [12][27]. Additional Insights 8. User Engagement and AI Features - New AI products are beginning to monetize, contributing **13%** and **3%** of online marketing revenue from AI agents and digital humans, respectively. User engagement metrics, such as MAU and daily time spent, are showing positive trends, indicating potential for recovery in the search business [12][13][17]. 9. Financial Forecasts - Baidu's financial forecasts indicate a gradual recovery in net sales, with projected revenues of **RMB138.86 billion** in 2026 and **RMB152.52 billion** in 2027. The company is also expected to maintain a strong gross profit margin [54]. 10. Investment Implications - Baidu is rated as Market-Perform, with a target price increase from **USD90 to USD150** reflecting the latest multiples for its various businesses. The valuation incorporates the search business, AI Cloud, Robotaxi, and other investments [9][54]. This summary encapsulates the key insights and projections regarding Baidu's business performance, market positioning, and future growth potential, while also highlighting the challenges it faces in a competitive landscape.