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Investing.com - CLSA has raised its price target on Baidu (NASDAQ:BIDU) to $160.00 from $105.00 while maintaining an Outperform rating on the Chinese tech giant. Trading near $135, Baidu has surged over 60% year-to-date and appears undervalued according to InvestingPro analysis, with strong financial health metrics supporting further upside potential.
The firm identified five key growth areas for Baidu: Apollo Go, AI-native commercial products, AI SaaS, AI cloud, and Kunlun chips. CLSA noted that Apollo Go has achieved comparable daily rides to Waymo, while Baidu’s AI cloud revenue is similar to AliCloud. With a healthy gross profit margin of 47% and an attractive PEG ratio of 0.29, the company shows strong fundamentals for its growth initiatives.
CLSA expects Baidu to unlock value through a Hong Kong primary listing and potential spin-offs, while also increasing shareholder returns. The firm mentioned that Kunlun chips are currently selling to state-owned enterprises and internet giants.
Despite projecting a 20% year-over-year decline in ad revenue for Q3 2025 due to AI search disruption, CLSA forecasts non-ad revenue from AI agents and digital humans to reach 45%-50% of Baidu’s core revenue, becoming a new growth driver.
The price target increase reflects CLSA’s 25% higher non-ad revenue estimates over the next decade and a revised long-term margin projection from 17% to 22%.
In other recent news, Baidu has been the focus of several analyst updates, reflecting the company’s ongoing developments and challenges. Goldman Sachs raised its price target for Baidu to $154, maintaining a Buy rating, due to the potential growth in the company’s AI segment, despite an expected decline in core operating profit. Jefferies also increased its price target to $157, citing Baidu’s recent advancements in artificial intelligence and the acquisition of large AI cooperation clients. In contrast, Susquehanna raised its price target to $95, maintaining a Neutral rating, following Baidu’s mixed second-quarter results, highlighting a strong performance in the AI cloud segment but weakness in online marketing.
Benchmark adjusted its price target downward to $115, maintaining a Buy rating, due to challenges in Baidu’s advertising business, which saw a 15% revenue decline year-over-year in the second quarter of 2025. Tiger Securities maintained a Buy rating with a $100 price target, noting revenue challenges amid Baidu’s AI search transformation. Baidu’s core revenue decreased by 2% year-over-year, with advertising revenue dropping by 15%. The company’s non-GAAP EBIT margin fell to 17% from 26% the previous year, as AI-generated content became more prevalent in search results. These developments indicate a period of transition and adaptation for Baidu as it navigates its AI initiatives and advertising challenges.
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