Haitong International initiates coverage on Baidu (09888 HK) with an "Outperform" rating and a target price of 171 yuan

Haitong International published a report, initiating coverage on Baidu-SW (09888 HK). As the wave of AI technology transitions from exploration to large-scale implementation, Baidu, as one of the domestic full-stack AI leaders, warrants significant attention for its strategic positioning and commercialization prospects. Therefore, it has initiated coverage with an "Outperform" rating and a target price of 171 yuan.

The report indicates that Baidu disclosed AI-driven new business revenue for the first time this quarter, which grew by 50% year-on-year, accounting for 39% of Baidu's core business revenue. Additionally, on November 25, Baidu announced the establishment of a technology research and development organization, creating a foundational model research department responsible for developing highly intelligent and scalable general artificial intelligence models, and a new application model research department responsible for fine-tuning and exploring specialized models needed for business application scenarios, both reporting to Baidu CEO Robin Li. The company will continue to deeply explore AI-related businesses in the future. The firm believes this will help Baidu accelerate the monetization process of AI products.

The report states that in the third quarter, Baidu recognized an impairment of core assets amounting to 16.2 billion yuan, concentrating resources on high-potential businesses while continuing to control costs and improve efficiency, with profit margins expected to improve after the third quarter