TLDR
- Susquehanna raised Baidu’s price target from $95 to $110, maintaining a Neutral rating
- J.P. Morgan upgraded BIDU to Overweight and increased price target from $110 to $188, citing AI and cloud as primary growth drivers
- Baidu shares jumped nearly 8% in early trading following J.P. Morgan’s upgrade
- Third-quarter results showed 7% revenue decline overall, but AI Cloud revenue surged 21% to RMB 6.2 billion
- J.P. Morgan forecasts Kunlun chip sales to increase sixfold, reaching RMB 8 billion in 2026
Baidu shares surged nearly 8% in early Monday trading after J.P. Morgan issued a bullish upgrade over the weekend. The firm moved its rating to Overweight from Neutral and raised its price target to $188 from $110.
J.P. Morgan analysts, led by Alex Yao, stated that cloud and AI are set to become the primary growth engines for Baidu. This marks a shift away from expectations of a rebound in the company’s legacy advertising business.
The research firm highlighted Baidu’s Kunlun AI chip as one of the best positioned in the market. J.P. Morgan forecasts chip sales will increase sixfold to reach RMB 8 billion in 2026.
Baidu’s third-quarter 2025 results showed total revenues of RMB 31.2 billion, down 7% year-over-year. However, the AI Cloud segment delivered strong performance with 21% growth, reaching RMB 6.2 billion in revenue.
The online marketing business continued to face headwinds. Susquehanna noted that Baidu expects further pressure on both revenue and profits from AI search monetization efforts.
GPU Compute and Enterprise Demand Drive Optimism
J.P. Morgan believes domestic demand for AI compute in China remains intense. Hyperscalers are increasingly sourcing from local solution providers, which benefits Baidu’s position.
The firm expects Baidu’s GPU compute revenue to maintain triple-digit growth. This growth is driven by what analysts called “enterprise mania for model training, fine-tuning, and inference.”
Cloud revenue is projected to grow approximately 61% in 2026, accelerating from roughly 23% in 2025. These forecasts underpin J.P. Morgan’s more optimistic outlook on the stock.
Susquehanna took a more cautious stance despite raising its own price target to $110 from $95. The firm maintained its Neutral rating on the stock.
Susquehanna analysts wrote that while Baidu’s valuation “remains undemanding,” the stock is “likely to remain rangebound” in the near term. This reflects concerns about the transition period between legacy and new revenue streams.
AI Products Show Strength Despite Ad Business Cannibalization
Baidu’s numerous AI products are growing quickly and have helped offset challenges in core advertising. The company expressed optimism about these initiatives during its third-quarter earnings report.
However, J.P. Morgan noted a trade-off in the business model. While AI-marketing revenue is “growing strongly,” the expansion in AI-based ad services is likely to cannibalize the legacy search advertising business.
Uncertainty remains around when the traditional search ads business will stabilize. This creates near-term unpredictability in Baidu’s revenue mix.
Benchmark previously adjusted its price target for Baidu to $158 from $115, maintaining a Buy rating. The firm cited growing artificial intelligence initiatives as the reason for its optimism.
Baidu’s current stock price stands at $110.95. J.P. Morgan’s new $188 price target implies upside of 69.4% from current levels.
The company expects margins to begin improving despite near-term pressure on profitability. Baidu is focusing its strategic efforts on AI technologies and robotaxi expansion alongside its cloud business.
Kunlun chip sales and GPU compute consumption are expected to drive the majority of AI and cloud revenue growth going forward. These hardware and infrastructure plays represent a different business model than Baidu’s historical search dominance.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
