BofA warns Fed risks policy mistake with early rate cuts
On Monday, Macquarie analyst Ellie Jiang revised the price target for Baidu (NASDAQ:BIDU) stock, lowering it to $83 from the previous target of $85, while preserving a Neutral rating on the shares. Currently trading at $85.77, InvestingPro analysis suggests the stock is undervalued, with a P/E ratio of 8.55. Jiang highlighted that while Baidu is increasing the amount of AI-generated content in its search platform, the strategy for monetizing these AI advancements is not yet clear. This is particularly relevant given the current sluggish economic environment and the intense competition in China’s search sector.
Jiang expressed a conservative outlook on Baidu’s primary advertising business, projecting a 6% year-over-year decline in revenue for the first quarter of 2025 to Rmb15.9 billion, which is slightly below the consensus estimate from Visible Alpha. The company’s overall revenue stands at $18.24 billion, with a forecasted growth of 3% for FY2025. Despite current challenges, there is a positive note regarding Baidu’s AI Cloud, which is emerging as a significant growth area. The AI Cloud is expected to see a 25% year-over-year increase in revenue for the first quarter, rising to Rmb5.9 billion, which could help mitigate the challenges faced by the advertising segment.
The report also touched on Baidu’s Robotaxi service, which has completed over 10 million rides and covered more than 150 million kilometers without a driver. Having achieved full driverless operation in China, Baidu is now looking to expand its Robotaxi service internationally. A collaboration agreement has been signed with Dubai’s Roads and Transport Authority to deploy 100 Robotaxis by the end of 2025 and expand to over 1,000 by 2028. Baidu aims to enter additional markets with higher average selling prices, such as Europe and Japan, while also working to reduce vehicle hardware costs and the need for safety personnel. However, Jiang noted that the financial impact of the Robotaxi service is currently limited and does not contribute to Macquarie’s valuation of the company. For a deeper understanding of Baidu’s financial health and growth potential, InvestingPro subscribers can access comprehensive analysis, including detailed financial metrics and expert insights in the Pro Research Report.
In other recent news, Baidu announced a strategic partnership with Dubai’s Roads and Transport Authority to deploy 100 Apollo Go autonomous vehicles in Dubai by the end of 2025. This move marks Baidu’s first expansion of its autonomous ride-hailing platform outside mainland China and Hong Kong. Additionally, Baidu plans to increase the fleet to at least 1,000 vehicles by 2028, aligning with Dubai’s goal to enhance autonomous transportation. In financial developments, Baidu has issued $2 billion in exchangeable bonds and CNY-denominated senior notes worth approximately $1.38 billion, with plans to use the proceeds for debt repayment and potentially increasing share repurchases. Analysts from Bernstein have maintained a Market Perform rating on Baidu, raising the price target to $108, citing potential growth in AI cloud services. Meanwhile, Citi analyst Alicia Yap reaffirmed a Buy rating with a $139 target, emphasizing the company’s focus on AI and potential share buybacks. Benchmark analyst Fawne Jiang also maintained a Buy rating with a $130 target, highlighting Baidu’s AI Cloud growth and the anticipated adoption of GenAI in China. These developments reflect Baidu’s strategic initiatives and financial maneuvers amid its ongoing focus on artificial intelligence advancements.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.