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On Thursday, Benchmark analyst Fawne Jiang adjusted the price target for Baidu (NASDAQ:BIDU) stock, bringing it down to $120 from the previous target of $130. Currently trading at $85.48, the stock appears undervalued according to InvestingPro analysis. Despite this reduction, the firm maintained a Buy rating on the company’s shares, aligning with the broader analyst consensus range of $77.15 to $158.64.
Baidu recently reported its first-quarter earnings for 2025, surpassing expectations with robust revenue and earnings. With total revenue of $18.24 billion and an impressive gross profit margin of 50.42%, the company trades at an attractive P/E ratio of 8.88. The company’s AI Cloud was a standout performer, showing a year-over-year growth of 42% and achieving margins that surpassed those of its key competitors. The positive results have led Benchmark to increase its full-year projections for Baidu’s cloud business.
The adoption of Baidu’s GenAI search technology is also progressing more rapidly than anticipated. Management is aiming for over half of all search queries to be powered by GenAI by the middle of the year. This strategic move is expected to differentiate Baidu’s AI search from traditional search methods. InvestingPro data shows the company maintains a GREAT financial health score of 3.05, supporting its ambitious AI initiatives. However, the analyst noted that while the long-term potential is significant, the current monetization of this technology is limited and still in the trial and error phase.
Due to the uncertainties surrounding the timing and efficiency of monetization for Baidu’s AI search, Benchmark has revised its forecast for the company’s 2025 core advertising revenue, now expecting an 8% year-over-year decline compared to the previous projection of flat growth. Adjustments were also made to the estimated earnings per share (EPS) for the fiscal year, which contributed to the decision to lower the price target. For a comprehensive analysis of Baidu’s valuation and growth prospects, access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Baidu’s first-quarter results have shown significant developments across various sectors. The company’s AI Cloud revenue experienced a 42% year-over-year surge, reaching RMB 6.7 billion, driven by strong demand for generative AI training. Meanwhile, Baidu’s core advertising revenue saw a 6% decline, attributed to the transition towards AI-driven search models. Analysts from UBS and US Tiger Securities have adjusted their price targets for Baidu, with UBS lowering it to $107 and US Tiger Securities to $110, both maintaining a Buy rating. Macquarie has also revised its target to $83, maintaining a Neutral rating, citing concerns about monetizing AI advancements.
Baidu’s autonomous driving initiative, Apollo Go, has expanded internationally, with plans to deploy 100 robotaxis in Dubai by 2025, aiming to reach 1,000 by 2028. This move aligns with Dubai’s goal to convert 25% of its transportation to autonomous mode by 2030. Additionally, Baidu announced a $2 billion exchangeable bond issuance to facilitate the sale of a significant portion of its stake in Trip.com. Bernstein analysts maintained a Market Perform rating, noting the strategic timing of these actions with Baidu’s AI initiatives expected to gain traction soon.
These recent developments reflect Baidu’s ongoing efforts to enhance its AI and autonomous driving capabilities, despite facing challenges in monetizing AI search. Baidu’s management remains focused on leveraging its AI Cloud and autonomous driving sectors for long-term growth.
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