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Investing.com-- Baidu Inc’s (NASDAQ:BIDU) cloud and generative AI businesses remain bright spots amid China’s uneven macroeconomic recovery, Mizuho (NYSE:MFG) analysts said in a note, as they raised their price target on the stock
Cloud revenue surged 26% year-on-year in the fourth quarter, benefiting from broader AI adoption, with generative AI now contributing a double-digit percentage of revenues.
Mizuho analysts highlighted Baidu’s strategic shift toward open-sourcing its upcoming ERNIE 4.5 model, which they said could accelerate mass adoption, following a trend seen with DeepSeek’s AI offerings.
“Baidu continues to improve AI adoption throughout the core business, with 22% of search results pages containing AI content,” analysts wrote, noting that daily Application Programming Interface (NASDAQ:TILE) (API) calls for the Ernie LLM had risen sharply to 1.65 billion in December from 50 million a year earlier.
The brokerage raised PT to $105 from $95, while reiterating its “Outperform” rating, viewing Baidu’s valuation as attractive despite geopolitical concerns.
While advertising revenue declined 7% from a year earlier, Mizuho analysts expect a gradual improvement in 2025, supported by AI-driven search monetization and macroeconomic policy stimulus.
Their checks indicated a seasonal softness in early 2025 due to the Lunar New Year but projected a slight improvement in year-over-year revenue trends.
Mizuho raised its 2026 core EBITDA forecast for Baidu by 5% to 31 billion yuan, citing AI adoption and macro support.
Baidu’s cloud business could add $30 per share, analysts said, calling generative AI a “free call option” at current trading levels.
However, U.S.-listed Baidu shares closed 7.5% lower on Tuesday.