The article "After Earnings" summarizes the latest target prices and views from brokerages following Baidu's earnings announcement

AASTOCKS
2026.02.27 03:47

Baidu (09888.HK) stock price fell 4.3% yesterday. After the market closed, it announced its quarterly results, opening down 1.1% this morning before rebounding. It is currently reported at HKD 125, up 1.3%, with a transaction volume of HKD 929 million. Citi stated that Baidu's AI cloud infrastructure has become a new growth driver, with AI-driven revenue accounting for 43% of Baidu's General Business (BGB, formerly Baidu Core). In the fourth quarter of 2025, Baidu's revenue met expectations, while profits exceeded expectations. BGB's total revenue and adjusted EBIT fell 6% and 39% year-on-year, respectively, to RMB 26.1 billion and RMB 2.8 billion, mainly due to a year-on-year decline of about 16% in online marketing revenue. The bank predicts that Baidu's general business will return to positive growth in the second quarter of this year, based on base effect and increased contributions from emerging AI-driven business revenue, especially in AI cloud infrastructure, which should become a new growth driver. AI cloud and Luobo Kuai Pao could each be valued at tens of billions of dollars. The bank sees potential for Baidu to be primarily listed in Hong Kong, with share buybacks and dividend policies as the next catalysts for the stock price. The bank maintains a "Outperform" rating on Baidu, with an ADR target price of USD 176. It also predicts that Baidu's return on equity from this year to 2028 will be between 6.8% and 7.4%, higher than last year's 2.1%, but lower than 9.4% in 2024.

The stock significantly declined yesterday (26th) before the earnings announcement. The company announced its fourth-quarter results after the market closed yesterday, with non-GAAP net profit falling 42% year-on-year to RMB 3.907 billion, higher than the upper limit of RMB 3.875 billion predicted by eight brokerages. Quarterly net profit fell 66% year-on-year to RMB 1.782 billion, lower than the lower limit of RMB 2.012 billion predicted by five brokerages. Total revenue fell 4% year-on-year to RMB 32.74 billion, up 5% quarter-on-quarter, in line with the predictions of ten brokerages, which ranged from a year-on-year decline of 3.6% to 5.1%. During the quarter, core AI new business revenue was RMB 11.3 billion, accounting for 43% of Baidu's general business revenue. Among them, intelligent cloud infrastructure, AI applications, and AI native marketing service revenues were RMB 5.8 billion, RMB 2.7 billion, and RMB 2.7 billion, respectively. Baidu stated that the spin-off and listing of Kunlun Chip is progressing, and the group recently announced a new USD 5 billion share buyback plan and adopted a dividend policy for the first time, with the first dividend expected to be paid by the end of this year.

【Brokerage estimates quarterly core advertising revenue fell 16% year-on-year】

UBS stated that while appreciating Baidu's management's clearer focus on AI plans, it believes investors need time to adjust to the changes in past financial statements and understand business momentum. The bank estimates that Baidu's core advertising revenue fell 16% year-on-year in the fourth quarter, and expects this revenue to record a low double-digit decline in the first quarter of this year, with subsequent quarters showing quarter-on-quarter improvement. The bank has lowered its forecast for Baidu's core business revenue in the first quarter of this year by 2.5%, mainly based on the ongoing challenges faced by traditional businesses, but slightly raised its forecast for the core business's non-GAAP operating profit margin, based on the company's continued focus on operational efficiency The bank gives Baidu a target price of HKD 175 / USD 180 based on a core advertising business P/E ratio of 5 times, net cash and long-term investments, a cloud business P/S ratio of 3 times, a valuation of USD 15 per share for Luobo Kuaipao (corresponding to XPeng), and a valuation of USD 49 per share for Kunlun Core.

Nomura stated that according to their estimates, Baidu's total advertising revenue in the fourth quarter of last year, including AI advertising and traditional search, fell by 16% year-on-year, in line with their forecast. AI search accounted for 18% of total advertising revenue. The bank also noted that Baidu completed a large-scale human resources optimization in December last year, resulting in one-time employee compensation expenses in the fourth quarter, with restructuring expected to bring significant cost savings and efficiency growth this year. The bank further mentioned that Baidu's management approved a new round of USD 5 billion in share buybacks, while also approving a dividend policy for the first time, clarifying that dividends are not included in the buyback amount and stating that dividends will be paid no later than the end of this year, with the possibility of distributing shares as dividends, meaning the company may directly distribute some Kunlun Core shares to shareholders. The bank believes investors will welcome the new annual dividend policy, but market expectations for announcing dividends in the recently released quarterly results seem to have been delayed. The bank also indicated that the management's plan for Kunlun Core's IPO is progressing smoothly and is confirmed to be completed within the year. The bank maintains a "Buy" rating for Baidu and an ADR target price of USD 196, predicting a P/E ratio of 20 times.

The latest comprehensive ratings and target prices for Baidu (BIDU.US) from 6 brokerages are as follows:

Brokerage│Investment Rating│Target Price

Nomura│Buy│USD 196

Citi│Buy│USD 186

Bank of America Securities│Buy│USD 180

UBS│Buy│USD 180

Citi│Outperform│USD 176

Morgan Stanley│In line with the market│USD 150

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Brokerage ratings and target prices for Baidu (09888.HK):

Brokerage│Investment Rating│Target Price

Bank of America Securities│Buy│HKD 176

UBS│Buy│HKD 175

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Brokerage│Viewpoint

Nomura│AI-driven business is solid, chip business IPO plan on track

Citi│Quarterly earnings beat expectations, annual AI-driven business up 48% year-on-year

Bank of America Securities│Quarterly overall business revenue meets expectations, adjusted operating profit exceeds forecasts

UBS│Continuing to shift towards AI-first strategy

Citi│AI cloud infrastructure becomes a new driving force

Morgan Stanley│Quarterly revenue meets expectations, operating cash flow turns positive

Goldman Sachs│Quarterly results generally meet expectations, AI-driven business shows solid quarterly growth

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