Goldman Sachs slightly raises Baidu's target price to 151 yuan, expects profit margins to bottom out and rebound

Goldman Sachs published a research report stating that Baidu (09888.HK) third-quarter performance was generally in line with expectations, with robust growth in cloud business helping to offset the decline in advertising revenue. As expected by the market, the group disclosed its AI-related business performance for the first time, focusing on showcasing the results of AI technology empowerment. Management revealed that third-quarter AI new business revenue grew by over 50% year-on-year, reaching approximately 10 billion RMB, accounting for about 40% of total revenue.

Goldman Sachs expects that the related AI business, covering cloud infrastructure, chips, AI applications and agents, as well as autonomous driving, has fully reflected Baidu's cross-ecosystem AI business capabilities. Therefore, although traditional search advertising business may still be under pressure in the coming quarters, driven by the continued rapid growth of AI-enabled businesses, revenue is expected to recover in the fourth quarter and next year. It is also anticipated that the group's net profit margin will rebound from the third-quarter level. The "Buy" rating is maintained, with the target price raised from 150 RMB to 151 RMB, and Baidu (BIDU.US) U.S. stock target price raised from 154 USD to 155 USD