Macquarie trimmed its price target on Baidu (NASDAQ:BIDU) from $85 to $83, maintaining a Neutral rating, as the Chinese tech giant grapples with a slow-moving macro environment and stiff competition in the search market.
While Baidu has been increasing the share of AI-generated content in its search platform, analysts remain cautious about the timeline for meaningful AI monetization. The firm’s core advertising business is expected to shrink further, with first-quarter revenue projected to decline 6% year-over-year to RMB 15.9 billion—slightly below market consensus.
Despite ad pressure, Baidu’s AI Cloud segment is showing promise. Enterprise adoption continues to climb, with AI Cloud revenue anticipated to rise 25% year-over-year to RMB 5.9 billion, helping to cushion the impact of weaker ad sales.
Meanwhile, Baidu’s autonomous driving initiative is shifting its sights overseas. The company’s Robotaxi service, which has already surpassed 10 million rides and 150 million kilometers in China, is targeting global expansion. A partnership in Dubai sets the stage for deploying 100 Robotaxis by the end of 2025, and scaling up to over 1,000 by 2028. Baidu is also eyeing high-value markets like Europe and Japan to boost revenue per ride, while working to lower operational costs through vehicle hardware and personnel reductions.
However, given its early stage and limited revenue contribution, Robotaxi development is not yet included in Macquarie’s valuation model for Baidu.