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Investing.com - Benchmark has reiterated its Buy rating and $120.00 price target on Baidu (NASDAQ:BIDU), currently trading at $86.88, ahead of the company’s second-quarter earnings report scheduled for August 20. According to InvestingPro analysis, Baidu appears undervalued, with analysts’ targets ranging from $71.81 to $145.54.
The research firm expects Baidu’s Core advertising business to continue facing growth challenges due to market share pressures and the company’s accelerated integration of GenAI-generated content into search results.
Benchmark has lowered its second-quarter and full-year 2025 Core advertising growth forecasts to -16% and -13% year-over-year, respectively, noting limited visibility around near-term recovery in the search and advertising businesses.
Despite advertising headwinds, the firm highlighted Baidu’s growing momentum in autonomous driving, particularly its recent strategic partnership with Uber (NYSE:UBER) to deploy Apollo Go globally.
Benchmark described the Uber partnership as "an early but important step that may enhance commercial viability and begin to factor into asset valuation over time."
In other recent news, Baidu’s first-quarter earnings for 2025 exceeded expectations, driven by significant growth in its AI Cloud services, which saw a 42% year-over-year increase. The company’s revenue performance has prompted Benchmark to raise its full-year projections for Baidu’s cloud business. However, several analysts have revised their price targets for Baidu, reflecting ongoing challenges in monetizing AI-generated search results. Tiger Securities lowered its price target to $100, citing difficulties in monetizing AI search queries, which now make up about 50% of total searches. Benchmark also reduced its target to $120, while UBS adjusted its price target to $107, both maintaining a Buy rating.
US Tiger Securities also revised its target to $110, noting Baidu’s transition to AI in its search business. Despite the strong earnings, Baidu reported a 6% year-over-year decline in core advertising revenue, slightly better than the previous quarter’s 7% decrease. This decline is linked to the shift from traditional search monetization to an AI-driven model. Baidu’s management continues to focus on enhancing search quality by integrating more AI-generated content.
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