Oct. 6 at 5:34 PM
Morgan Stanley said Baidu’s valuation looks stretched after its recent rally, maintaining an Equal-Weight rating but raising its target price. The firm increased its DCF-based target to
$140 and introduced a sum-of-the-parts valuation of
$220, reflecting AI cloud and chip potential. Core ad revenue remains under pressure, with AI search results accounting for 64% of ad impressions in July, where monetization is weaker than in traditional search. Analysts expect core ad revenue to fall 15% in 2025, though digital, human, and agent-based ads could offset some weakness, contributing about 16% of Q2 ad revenue.
Morgan Stanley estimates personal cloud makes up 30% of Baidu’s cloud revenue, driven by AI transformation, while enterprise cloud subscriptions remain the main growth driver. Partnerships — including Apple’s AI work in China and the AI chip Kunlun project with China Mobile — are expected to boost AI cloud revenue by 32% in FY2025.
$BIDU