Citigroup raised the target price for Baidu to $188 and maintained a "Buy" rating

Citi released a report stating that although Baidu (09888.HK) met revenue expectations for the fourth quarter of 2025 and exceeded profit expectations, its stock price still fell over 6% in the U.S. market, possibly due to the lack of a declared first dividend, even though management reiterated that dividends are expected to be declared by the end of the year; revenue from AI cloud infrastructure showed steady quarter-on-quarter growth, but the market remains concerned that revenue growth may have slowed after excluding Kunlun chips; revenue disclosures driven by artificial intelligence were good, but offset by a lack of disclosure regarding traditional search business.

Looking ahead to 2026, the bank expects Kunlun chip revenue to reach RMB 13.2 billion, accounting for 52% of total AI cloud infrastructure revenue, with this business's revenue expected to grow 30% year-on-year to RMB 25.6 billion. Revenue from AI-native marketing business is forecasted to grow 51% year-on-year to RMB 14.8 billion. After valuation adjustments, the bank raised its target price for Baidu (BIDU.US) stock from $186 to $188. Based on reasonable valuation, potential premium from the spin-off of Kunlun chips, and momentum for overseas expansion of the robotaxi business, it maintains a "Buy" rating