Baidu, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Thomas Chong from Jefferies maintained a Buy rating on the stock and has a $181.00 price target.
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Thomas Chong has given his Buy rating due to a combination of factors that underscore the resilience and upside potential of Baidu’s core operations. He expects Baidu Core to return to sequential revenue growth, with the downturn in online advertising moderating year over year, while the company’s AI-focused cloud infrastructure business continues to expand at a robust pace into 2025 and likely outgrow the broader industry in 2026. Profitability trends are also seen improving, with core gross profit and operating profit anticipated to rise quarter over quarter and operating cash flow remaining positive. In addition, the planned listing or separation of KLX is viewed as a catalyst to surface hidden value within Baidu’s ecosystem, given its similarity to other high-growth AI chip players.
Baidu’s autonomous driving and robotaxi platform, Apollo Go, is another key driver supporting the Buy view, as it gains regulatory traction overseas, for example with fully driverless testing in Dubai, and builds strategic alliances with global ride-hailing platforms in major cities such as London. Order volumes for the robotaxi service are trending strongly, highlighting the long-term monetization potential of Baidu’s autonomous driving technology. At the same time, management is emphasizing consistent and comprehensive capital return policies, aiming to deliver shareholder value through more stable buyback activities and a disciplined approach to cash deployment. While acknowledging risks from macro-sensitive ad demand, competitive pressures, and user growth uncertainties, Chong believes the combination of AI-led growth, improving profitability, asset unlock from KLX, and shareholder-friendly actions justifies maintaining a Buy rating and price target.
In another report released on January 13, Bank of America Securities also reiterated a Buy rating on the stock with a $180.00 price target.