Baidu (BIDU) Stock Forecast & Price Target

Baidu's dominant position in the Chinese internet search market, with over 50% market share in 2024, underpins its substantial revenue generation, particularly from online marketing services, which comprise 70% of core revenue. The company's innovative strides in artificial intelligence have led to significant growth in AI Cloud, with revenues surging 34% year-over-year in 1H25, highlighting broad demand for AI solutions across various sectors. Furthermore, non-advertising revenues have gained momentum, constituting approximately 40% of Baidu Core, bolstered by the growth of subscription-based services and impressive jumps in AI-native marketing services, further reinforcing a positive financial outlook.

Baidu's negative outlook is primarily driven by a decline in core revenues, which fell by 2% year-over-year, significantly impacted by a 15% drop in advertising revenue as the company's transition to generative AI search has not yet yielded effective monetization. This revenue setback is compounded by a noted 21% decline in search ad revenue, indicating ongoing challenges in their advertising monetization strategy amidst shifting market dynamics. Additionally, despite a marginally positive EBITDA performance, a notable decrease in margins by 11.6 percentage points suggests increasing pressures on profitability as Baidu navigates its transition within the competitive landscape of AI technology.