Fed’s Powell opens door to potential rate cuts at Jackson Hole
Investing.com - Tiger Securities analyst Bo Pei maintained a Buy rating and $100 price target on Baidu (NASDAQ:BIDU), the $30.89 billion Chinese tech giant, despite ongoing revenue challenges from the company’s AI search transformation. According to InvestingPro analysis, Baidu appears undervalued at its current trading price of $86.76, with strong fundamentals reflected in its attractive P/E ratio of 8.52.
Baidu Core revenue fell 2% year-over-year to RMB 26.3 billion in the second quarter, with core advertising revenue dropping 15% to RMB 16.2 billion. The company’s Core non-GAAP EBIT margin declined to 17% from 26% a year ago as AI-generated content expanded to over 50% of search result pages by June’s end, reaching 64% in July. Despite these challenges, InvestingPro data shows Baidu maintains a healthy financial position with a current ratio of 2.29 and an overall Financial Health score of "GOOD."
AI Cloud revenue grew 27% year-over-year to RMB 6.5 billion, supported by subscription-based services and high GPU utilization exceeding 90% for key clusters. Management expects slower growth in the second half of 2025 due to fluctuations in project-based revenue.
Apollo Go, Baidu’s autonomous driving service, delivered 2.2 million fully driverless rides in the second quarter, a 148% year-over-year increase. The service has achieved positive unit economics in China and is expanding globally through partnerships with Uber (NYSE:UBER) in Asia/Middle East and Lyft (NASDAQ:LYFT) in Europe.
For the third quarter, Baidu expects core ad revenue to face an even larger year-over-year decline as AI-generated content could exceed 70% of search results by quarter end, though management anticipates sequential improvement as the AI Search transformation nears completion and monetization increases. For deeper insights into Baidu’s AI transformation metrics and detailed financial analysis, check out the comprehensive Pro Research Report available on InvestingPro, which includes exclusive ProTips and expert analysis of the company’s strategic initiatives.
In other recent news, Baidu Inc. reported its earnings for the second quarter of 2025. The company experienced a 4% year-over-year decline in total revenue, reaching RMB 22.7 billion. Despite this decrease, Baidu saw a notable 27% increase in revenue from its AI cloud services. This growth in the AI sector highlights a significant area of expansion for the company. The earnings report did not indicate any changes in the stock price during the extended trading session. These developments reflect Baidu’s ongoing focus on advancing its AI capabilities amidst broader revenue challenges. Investors may find the growth in AI cloud services a point of interest. The earnings results offer insights into the company’s strategic direction and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.