In "The Big Banks," CICC raises Baidu's target price to $187, expecting the value of AI full-stack capabilities to be quickly released

China International Capital Corporation published a research report predicting that Baidu (09888.HK) will see a year-on-year revenue decline of 6% in the fourth quarter of last year, in line with market expectations. Among them, advertising revenue is expected to see a year-on-year decline narrowing to 16%, while non-advertising revenue is believed to continue growing, with a forecasted year-on-year increase of 13%.

The firm currently predicts that Baidu's core adjusted operating profit margin for the last quarter will reach 10.3%, higher than the market's general expectation of 9.8%. They anticipate that the potential spin-off of Kunlun Core for a Hong Kong listing will quickly release the value of the group's AI full-stack technology capabilities and gain market recognition.

China International Capital Corporation emphasizes that Baidu is adopting a continuous and accelerated AI investment strategy, which will generate stable, high-quality AI-enabled revenue and profits in the future. Coupled with the group's ample cash reserves, it is expected to return value to shareholders in various ways. Therefore, they maintain a "Buy" rating on Baidu (BIDU.US) stock, raising the target price to $187