Baidu (BIDU) Stock Forecast & Price Target

Baidu's core revenue advanced by 1% year-over-year, demonstrating resilience despite challenging market conditions. The company is poised for significant growth in its AI Cloud segment, which recorded a remarkable 26% year-over-year acceleration in the fourth quarter and is projected to achieve a 20% growth rate for fiscal year 2025, driven by strong demand in GPU cloud services. Additionally, Baidu's nationwide achievement of 100% driverless coverage and ongoing investments in AI capabilities underscore its competitive advantage and commitment to enhancing shareholder returns through an accelerated buyback program.

Baidu's financial outlook is negatively impacted by a 6.7% year-over-year decline in its core advertising business for the fourth quarter, which represents the primary source of its revenue and reflects ongoing market share losses. The company's operating profit margin (OPM) forecast has been reduced to 17% from 21% due to the high-margin ad revenue decrease and one-off costs associated with the closure of its joint venture with Geely, indicating a significant shift in operational efficiency. Additionally, Baidu's inability to effectively monetize its technological advancements, particularly in autonomous driving and artificial intelligence applications, exacerbates the challenges posed by adverse macroeconomic and geopolitical conditions in China.