Daiwa Capital Markets: Baidu's last quarter performance exceeded expectations, maintaining a "Buy" rating

Daiwa Capital Markets published a research report stating that Baidu (09888.HK) performed better than the firm's expectations in the fourth quarter of last year, with revenue declining 4% year-on-year to RMB 32.7 billion, in line with the firm's and market expectations. The gross margin fell by 3 percentage points year-on-year to 44.2%, and the non-GAAP net profit decreased by 42% year-on-year to RMB 3.9 billion, both exceeding market expectations.

Daiwa noted that the monetization visibility of Baidu's AI cloud business is improving, and its AI application portfolio is among the most comprehensive in the industry. The firm maintains a "Buy" rating and slightly lowers the target price for Hong Kong stocks to HKD 175, while reducing the target price for U.S. stocks to USD 194, corresponding to a projected price-to-earnings ratio of approximately 22.6 times for 2026. The firm generally maintains its revenue forecasts for the group for the first quarter and the full year, expecting a year-on-year decline of 2% and a growth of 3%, respectively, and raises the non-GAAP net profit forecasts for the first quarter and the full year by 11% and 1%, respectively