Deutsche Bank expects artificial intelligence to lift shares of Baidu higher. The bank upgraded the Chinese internet provider to a buy rating from hold. Analyst Leo Chiang also hiked his target price to $156 from $88, signaling upside of 23%. Chiang pointed to artificial intelligence driving the next phase of growth at Baidu. “Baidu has established a set of leading AI businesses spanning cloud computing, robotaxis, intelligent search, and AI chips,” he wrote. “All in all, we believe these rising AI businesses will drive the next phase of growth for the company.” BIDU YTD mountain BIDU YTD chart He sees four main AI drivers boosting shares of Baidu higher, including Baidu’s AI Cloud, which offers enterprise customers full-stack AI infrastructure at a highly efficient cost. He also applauded the company’s robotaxi platform Apollo Go, which has already become a global leader and will continue to grow its global footprint. Chiang also sees tailwinds in Baidu’s growing intelligent search. Meanwhile, its AI chip subsidiary Kunlunxin is “well-positioned to capture the surging of AI capital expenditure” and could provide “substantial upside potential.” In the near term, Chiang expects advertising challenges to reduce monetization, ultimately causing total revenue to decline by 3% year over year in the fiscal 2025 year. In juxtaposition, he expects cloud revenue to increase by 23% on a yearly basis this fiscal year. “Looking ahead to FY26 and beyond, we anticipate a turnaround in total revenue growth, driven by: 1) the gradual stabilization of ad revenue as search transformation impacts fade and monetization from agents and digital humans increases; and 2) sustained strong momentum in cloud revenue,” he added. “We also see upside potential from surging AI chip shipments and potential robotaxi monetization.” Shares of Baidu have surged 51% this year.
