在推进中，以提供人工智能驱动的业务增长更多可见性并提高股东回报

Target PriceUS$161.70(Previous TPUS$150.70)Up/Downside29.9%Current PriceUS$124.44 Baiduannounced 4Q25 results:Baidu General Business revenue wasRMB26.1bn,down5.7% YoY, inline withBloomberg consensus;non-GAAP OPof BaiduGeneral Businessreached RMB2.8bn,down39% YoY, but was12%ahead of consensus.Regarding AI-powered businessdevelopmentin 4Q25: 1)AI-native marketingservicesrevenue grew110% YoYto RMB2.7bn; 2) AI-cloudinfrastructure revenuetotalled RMB5.8bn, with subscription-based revenuefrom AI acceleratorinfrastructure grew 143% YoY; and 3) AI applicationsrevenue reached RMB10.2bn in 2025, up 5% YoY.Key stock price driversforBaidu include: 1) reacceleration in overall ads revenue growth; 2) robust cloudrevenue growth; and 3) enhancement of shareholder return. Moredetailsregarding the spin-off andseparatelisting ofthechip business arm should serveasanadditional catalyst.Weroll over ourvaluationwindow to 2026E, andourSOTP-based target priceisadjustedto US$161.7(was US$150.7).MaintainBUY. China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Ye TAO, CFA(852) 3850 5226franktao@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk AI-empowered business has morevisibility.BaiduhasredefinedBaiduCore as Baidu General Business in 4Q25, which includes Baidu Core AI-poweredBusiness,Legacy Business(mainly consisting of traditionaladvertisingservicesacrosssearch, feed, and other properties), and Others.Revenue from Baidu Core AI-powered Business, Legacy Business, andOthers wasRMB11.3bn, RMB12.3bn, and RMB2.5bn, respectively, in 4Q25.The combined revenue decline for AI-native marketingservicesand LegacyBusiness was c.16% YoY in 4Q25(3Q25: 18% YoY decline), due to theongoing business adjustment,in our view. Onstandalonebasis,AI-nativemarketingservices revenue grew 110%YoY to RMB2.7bn,whichdemonstrated solid growth momentum.The recovery in ads revenue growthto positive trajectoryas well as strong growth in AI-nativemarketingservicesshould serve as one of the key drivers for Baidu’s stock price, in our view. Stock Data Solid cloud revenue growth in 2025.In 4Q25, revenue from AI Cloud Infra,which refers to AIinfrastructureand platform services serving enterprisesand the public sector, reachedRMB5.8bn. Meanwhile, subscription-basedrevenue from AI accelerator infrastructure within AI Cloud Infra saw revenuegrowth of143% YoY, acceleratingfrom 128% YoY in 3Q25.For 2025, AICloud Infra revenue (which includes revenue generated from chip businessarm) reached RMB19.8bn, up 34% YoY. Order volume growthof Apollo Go remained strong.Apollo Go provided3.4mn fullydriverless ridesin 4Q25, up202% YoY (3Q25:212%; 4Q24:36%),driven by the expansion in vehicle fleets. As ofFeb2026, Apollo Go’s globalfootprint has covered 26cities(Oct 2025: 22 cities). To date,Apollo Go fleetshave accumulated300mn autonomous kilometers, including 190mn fullydriverless autonomous kilometers. Source: FactSet OPMis recovering from trough.Non-GAAP OPM for Baidu Core was10.9%in4Q25,down5.9ppts YoY but1.1ppts better than consensus,demonstrating a recovery from 9.0% in 3Q25.Weexpectthe recovery inads revenue, as well as Baidu’s initiatives to drive operating efficiencyimprovementtodrive a sequential marginimprovementin 1Q26E. Quarterly results and estimates Changes in forecastand valuation Welower our 2026/2027E revenue forecast by1.4/1.4% to account for the cut in revenueforecastof iQIYI and Baidu’s non-core business. We cut 2026/2027E non-GAAP net profitforecast by9.5/1.1%to account for the increase inestimatesfor SG&A expenses and R&Dexpensesdue to the increase in investment to support the market promotion of AI-nativeapps. SOTP valuation of US$161.7per ADS We roll over our valuation window to 2026E,andcombinedwiththe adjustment inexchangerate assumption (from USD:RMB=1:7.2 to 1:7.0),ournewSOTP-based target pricerisesto US$161.7per ADS(was US$150.7),whichcomprises: 1) US$35.7for BaiduGeneral Business(mainly including the ads business,excludingApollo and Baidu Cloud), based on5.0x 2026E non-GAAP PE(was US$37.8 based on5.0x 2025E non-GAAP PE); 2) US$0.3for Apollo ASD(unchanged), based on 2.0x 2030E revenue, and discountedback to 2026E using a 13.0% WACC; 3) US$62.9for Baidu Cloud, based on4.6x 2026E PS(was US$61.8 based on 5.5x 2025EPS, which implied 4.6x 2026E PS based on previous forecast); 4) US$62.8fornet cash(was US$50.8),iQIYI and other investments, with a 30% holdingdiscount applied to thevaluationofUS$89.7per ADS.The increase in valuation was mainlydue to roll-over of valuation window to 2026E; Our target price translates into22x/16x 2026/2027E non-GAAP PE, or 12/9x 2026/2027Enon-GAAP PE ex-cash. Baidu's Board of Directors has authorized anewsharerepurchase program in Feb2026,under whichBaidumay repurchase up to US$5bnof its shares, effective through Dec 31,2028. The Board has also approved, for the first time, the adoption of a dividend policy fortheBaidu’sordinary shares, which may include regular and/or special distributions ofdivide