Baidu, Inc. (NASDAQ:BIDU) is one of the  Buzzing AI Stocks on Wall Street. On September 19, Goldman Sachs analyst Lincoln Kong raised the price target on the stock to $154.00 (from $90.00) while maintaining a Buy rating. The firm highlighted how Baidu’s decline trajectory is well understood by the market and already reflected in street earnings estimates. Q3 2025 is likely to witness the steepest drop in Baidu’s core profits. Nevertheless, analysts believe that investor focus is now shifting to Baidu’s f ...

Core Viewpoint - Goldman Sachs significantly raised its target price for Baidu, highlighting the market's renewed focus on its substantial value beyond traditional search, particularly its full-stack AI capabilities, accelerated commercialization of autonomous driving, and large cash reserves [1][3]. Group 1: Target Price Adjustment - Goldman Sachs analysts increased Baidu's US stock target price from $90 to $154 and the Hong Kong stock target price from HKD 88 to HKD 150, maintaining a "Buy" rating [1]. - Baidu's stock price has risen over 40% since early September, indicating a shift in market focus towards its non-search business growth potential [1]. Group 2: Valuation Reassessment - The core of the valuation reassessment is that Goldman Sachs assigned a combined SOTP valuation of nearly $200 per share for Baidu's AI cloud, Apollo Robotaxi, and net cash and long-term investments, significantly exceeding the traditional search business value of approximately $26 per share [3]. - Despite the recent stock price surge, Baidu is still seen as having a favorable risk-reward ratio, with potential upside of up to 60% in a bullish scenario [3]. Group 3: AI Cloud Business - Goldman Sachs views Baidu's AI cloud as having a core competitive advantage due to its complete full-stack capabilities, including self-developed Kunlun chips, deep learning platforms, AI models, and software applications [4]. - The valuation for Baidu's AI cloud business was raised to $25 billion (equivalent to $72 per share), with the valuation multiple increased from 3x to 5x P/S, aligning it with Tencent Cloud [4]. - Driven by demand for AI training and inference, Baidu's AI cloud achieved a 32% year-over-year growth in the first half of 2025, significantly outpacing previous levels [4]. Group 4: Apollo Robotaxi - In the autonomous driving sector, Goldman Sachs doubled the valuation of the Apollo Robotaxi business from $4 billion to $8 billion (equivalent to $23 per share) due to accelerated fleet deployment and improved profitability from the lower-cost RT6 model [6]. - The Apollo fleet exceeded 1,000 vehicles by Q2 2025 and is expected to reach 2,500 vehicles by year-end, outpacing domestic competitors [6]. - The manufacturing cost of the sixth-generation unmanned vehicle RT6 is below $30,000, achieving breakeven unit economics in densely populated cities like Wuhan [6]. Group 5: Cash and Balance Sheet - Goldman Sachs noted that Baidu's substantial cash on its balance sheet is being revalued by the market, with $22 billion in net cash and $6 billion in long-term investments valued at $81 per share in the SOTP valuation [7]. - Historically, the market discounted this cash value, but Baidu's proactive stance on stock buybacks and potential dividends is expected to unlock this cash value [7]. - Despite increased capital expenditures on AI and chips, Baidu's core search business and profitable cloud operations continue to generate stable cash flow to support new business investments [7].

Group 1 - HSBC maintains a hold rating on SenseTime (00020.HK) and raises the target price to HKD 3.1, citing the company's "1+X" strategic transformation and improved market sentiment, but warns of potential supply bottlenecks in AI chip resources [1] - Goldman Sachs maintains a buy rating on Hong Kong Exchanges and Clearing (00388.HK) and raises the target price to HKD 544, expecting structural increases in southbound capital flow and participation due to the company's diversified offerings [1] - Citic Lyon reiterates a market outperform rating on CATL (03750.HK) and raises the H-share target price to HKD 670, driven by strong demand in the electric vehicle and ESS markets, with a projected 10% increase in battery shipments from 2026 to 2027 [1] Group 2 - Morgan Stanley maintains an overweight rating on Ping An Insurance (02318.HK) and raises the target price to HKD 70, adjusting earnings forecasts for 2025 to 2027 upwards by 1.9%, 0.4%, and 0.6% respectively [2] - Morgan Stanley gives China Life Insurance (02628.HK) an overweight rating and raises the H-share target price to HKD 25.7, with earnings forecasts for 2025 to 2027 increased by 13.1%, 1%, and 1.9% respectively, benefiting from a rising stock market and stable sales growth [3] Group 3 - Goldman Sachs reiterates a buy rating on Baidu (09888.HK) and raises the target price to HKD 150, highlighting the rapid growth of non-search businesses and the acceleration of AI value release [4] - Guotai Junan maintains an overweight rating on Boss Zhipin (02076.HK) with a target price of HKD 109.66, noting a 30.9% year-on-year growth in adjusted net profit and steady progress in AI commercialization in recruitment scenarios [4] - Guotai Junan maintains an overweight rating on Super盈 International Holdings (02111.HK) with a target price of HKD 4.42, emphasizing the company's strong position in the elastic fabric sector and consistent high dividend yield [5]

Core Viewpoint - Goldman Sachs reaffirms a "Buy" rating for Baidu, considering the rapid growth of non-search business and accelerated value release from AI [1] Summary by Categories Revenue Projections - Goldman Sachs expects Baidu's non-search business revenue to account for approximately 54% of core revenue by 2027, with cloud business contributing 36% [1] Competitive Advantage - The firm highlights Baidu Cloud's full-stack capabilities from chips to platforms and AI applications as a core competitive advantage [1] Positive Outlook on Apollo Robotaxi - The outlook on Apollo Robotaxi has become more positive, indicating confidence in its future performance [1] Target Price Adjustment - The target price for Baidu has been raised from 88 HKD to 150 HKD, reflecting an attractive risk-reward profile [1]

Summary of Baidu.com Inc. (BIDU) Conference Call Company Overview - **Company**: Baidu.com Inc. (BIDU) - **Market Cap**: $48.3 billion - **Enterprise Value**: $36.7 billion - **Current Price**: $137.83 - **12-Month Price Target**: $154.00 (Upside: 11.7%) [1][18] Key Industry Insights - **Search Business**: The decline in Baidu's search business is acknowledged and reflected in market earnings estimates. A significant impact from ad deleveraging is expected in Q3 2025, with a projected 70% year-over-year decline in core operating profit [1][2]. - **Non-Search Business Growth**: The non-search revenue is anticipated to rise to 54% of Baidu's core revenue by 2027, with cloud services accounting for 36% of this growth [2][24]. Core Business Components 1. **Cloud Services**: - Estimated valuation of $25 billion or $72 per share, with a 32% year-over-year growth in 1H25 [22][24]. - Full stack capabilities from chips to AI applications are highlighted as a key competency [24][52]. - Target multiple raised to 5X price-to-sales to reflect growth potential [25]. 2. **Apollo Robotaxi**: - Valuation increased to $8 billion or $23 per share, with fleet size expected to grow from 1,000 to 2,500 by the end of 2025 [26][27]. - The lower cost RT6 model is expected to enhance profitability and fleet expansion [26][39]. - Breakeven unit economics are being achieved in high-density cities like Wuhan [40]. 3. **Net Cash and Long-Term Investments**: - Baidu holds $22 billion in net cash, valued at $64 per share, with proactive measures for shareholder buybacks and dividends expected to enhance market recognition of cash value [28][22]. Financial Projections - **Revenue Forecasts**: - 2024: Rmb 133,125 million - 2025E: Rmb 129,539.9 million - 2026E: Rmb 138,923.7 million - 2027E: Rmb 149,206.8 million [6][15] - **Earnings Per Share (EPS)**: - 2024: Rmb 77.20 - 2025E: Rmb 53.62 - 2026E: Rmb 66.36 - 2027E: Rmb 76.91 [6][15] Risks and Challenges - **Competitive Landscape**: Increased competition in AI cloud services and chip availability may impact growth [20]. - **Robotaxi Expansion**: Slower-than-expected ramp-up of Robotaxi fleets could hinder profitability [20]. - **Search Ads Decline**: Continued decline in search ads may lead to deteriorating margins and cash flow [20]. Future Catalysts - Anticipated higher value appreciation of the Robotaxi business due to fleet expansion and paid rides [19]. - Potential primary listing in Hong Kong and Southbound inclusion expected to bring additional fund flow [19]. - Asset value unlock of subsidiaries through external funding [19]. Conclusion Baidu is positioned for growth through its diversified business model, particularly in cloud services and autonomous driving technology. Despite challenges in its search business, the company’s strong cash reserves and proactive strategies for shareholder returns present a favorable risk-reward scenario for investors [18][22].