Baidu’s Strong Cloud Growth and AI Transformation Drive Buy Rating

In a report released yesterday, Alicia Yap from Citi maintained a Buy rating on Baidu (BIDU – Research Report), with a price target of $138.00.

Alicia Yap has given her Buy rating due to a combination of factors influencing Baidu’s current and future performance. The company has shown impressive growth in its cloud revenue, which increased by 42% year-over-year in the first quarter of 2025, driven by strong demand from both project-based and subscription-based enterprise customers. This growth highlights the potential of Baidu’s cloud services, even though there may be fluctuations in revenue due to the timing of project deliveries.
Additionally, Baidu’s ongoing AI transformation, particularly in the search segment, is a significant factor in the Buy rating. The company is investing heavily in AI infrastructure and related technologies, which is expected to impact operating margins in the short term. However, these investments are seen as necessary to meet the rising market demand for AI solutions. Despite a temporary decline in core advertising revenues, the undemanding valuation and potential for future growth in AI-driven areas support the Buy recommendation.

In another report released yesterday, UBS also maintained a Buy rating on the stock with a $107.00 price target.