Goldman Sachs raises Baidu's target price: re-evaluates the AI full-stack capabilities "from chips to applications," doubling the Robotaxi valuation

Goldman Sachs has significantly raised its target price for Baidu in a recent report, believing that the market is reassessing the immense value beyond its traditional search business, particularly its full-stack AI capabilities "from chips to applications," accelerated commercialization of autonomous driving, and substantial cash reserves.

According to news from the Chasing Wind Trading Desk, Goldman Sachs analysts Lincoln Kong and others published a report on September 19, raising Baidu's U.S. stock target price from $90 to $154, and the Hong Kong stock target price from HKD 88 to HKD 150, while reiterating a "Buy" rating. The report pointed out that Baidu's stock price has risen over 40% since early September, indicating that the market focus is shifting towards the growth potential of its non-search business. As of the time of writing, Baidu's Hong Kong stock is at HKD 131 per share, indicating a 14% upside based on Goldman Sachs' target price.

The core of this valuation reassessment lies in Goldman Sachs assigning a combined sum-of-the-parts (SOTP) valuation of nearly $200 per share for Baidu's AI cloud, Apollo Robotaxi, and the company's net cash and long-term investments, far exceeding the approximately $26 per share value of its traditional search business. This adjustment reflects that, driven by the AI wave, Baidu's growth engine is being re-identified and repriced.

The report believes that even after the recent significant rise in stock price, Baidu still has a good risk-reward ratio, with potential upside in a bull market scenario reaching 60%. Key future catalysts will include the commercialization progress of Robotaxi, more detailed financial disclosures of AI business, and potential major listings in Hong Kong.

AI Cloud Business: Full-Stack Capability is the Core Competitiveness

Goldman Sachs believes that the core competitiveness of Baidu AI Cloud lies in its complete full-stack capability—covering self-developed Kunlun chips, deep learning platforms, AI models, and software applications. The firm has raised the valuation of Baidu's AI cloud business to $25 billion (equivalent to $72 per share), increasing its valuation multiple from a previous 3 times price-to-sales (P/S) to 5 times, in line with Tencent Cloud.

The report noted that driven by the demand for AI training and inference, Baidu AI Cloud achieved a 32% year-on-year growth in the first half of 2025, significantly faster than previous levels. Goldman Sachs expects this business to maintain over 20% growth in the next two years, with a 10% EBITA (earnings before interest, taxes, and amortization) profit margin. Among them, GPU and subscription-based cloud services, which have higher profit margins and recurring revenue, now account for over 50% of enterprise cloud revenue.

In addition, the self-developed Kunlun chips are seen as a key component of its full-stack capability, not only supporting Baidu Cloud's computing power cluster from 10,000 cards to 30,000 cards but also beginning to win external customers. According to media reports, Kunlun chips received orders worth billions of RMB from China Mobile in August. Meanwhile, the commercialization progress of AI applications such as Baidu Wenku and Baidu Cloud Disk also shows the potential that has been underestimated by the market

Apollo Robotaxi: Valuation Doubles, Commercialization Accelerates

In the field of autonomous driving, Goldman Sachs has doubled the valuation of Apollo Robotaxi's business from $4 billion to $8 billion (equivalent to $23 per share), citing the accelerated deployment speed of its fleet, the lower-cost RT6 model enhancing profitability, and the broad prospects for international expansion.

According to the report, Apollo's fleet size exceeded 1,000 vehicles by the second quarter of 2025 and is expected to reach 2,500 vehicles by the end of the year, leading domestic peers. The manufacturing cost of its sixth-generation unmanned vehicle RT6 is less than $30,000, allowing for unit economic benefits of autonomous driving services to reach breakeven in cities with high fleet density, such as Wuhan.

Goldman Sachs also adjusted its valuation method for Apollo, shifting from a price-to-sales ratio to an EV/NOPAT (Enterprise Value/Net Operating Profit After Tax) approach that better reflects long-term growth potential, adopting a valuation framework similar to that of peers like Pony AI and Didi's autonomous driving business. In addition to its self-operated model, Baidu is accelerating its global market expansion through a "light asset" cooperation model with Uber, Lyft, and domestic ride-hailing platforms.

Unlocking Balance Sheet: Cash Value Reassessed

Goldman Sachs pointed out that the substantial cash on Baidu's balance sheet is being re-recognized by the market. The report fully accounts for the value of Baidu's $22 billion net cash and $6 billion long-term investments (totaling $81 per share) in its classified aggregate valuation.

In the past, the market often discounted the value of this cash. However, Goldman Sachs believes that Baidu has taken a more proactive stance in enhancing shareholder returns through stock buybacks and potential dividends, which helps unlock its cash value. The report states that despite a significant increase in capital expenditures for AI and chips, Baidu's core search business and profitable cloud business continue to generate stable cash flow, providing ample support for investments in new businesses.

Looking ahead, Goldman Sachs believes that further catalysts for Baidu's value reassessment remain. These include: the further exploration of the Robotaxi business's value as the fleet and paid order scale expand; the company providing more detailed financial disclosures on AI agents/software and cloud business growth; the potential for a major listing in Hong Kong by 2026 and inclusion in the Hong Kong Stock Connect, thereby attracting incremental funds; and the potential value release of subsidiaries like Kunlun Chips and XiaoDu through external financing or independent listings