DBS Keeps Hold Rating on Baidu Amid Strong Q1 Earnings

DBS maintains a Hold rating on Baidu, Inc. Class A with a price target of HK$84.00. The company's shares opened at HK$85.70. Baidu reported a quarterly revenue of HK$32.45 billion and a net profit of HK$7.72 billion, compared to HK$34.95 billion in revenue and HK$2.6 billion in net profit last year. The analyst consensus is Hold with a price target consensus of HK$90.00.

Chinese internet giant Baidu Inc. (HK:9888, NASDAQ:BIDU) reported mixed quarterly results for the second quarter (Q2) of 2025, with revenue declining and net profit surging. The company's shares opened at HK$85.70 and fell as much as 3% to HK$84.60 following the announcement [3].

Baidu's Q2 revenue was HK$32.45 billion (US$4.56 billion), a 4% year-over-year drop, primarily driven by a 15% decline in online marketing revenue to HK$16.2 billion. This marks a significant setback for Baidu, whose core business relies heavily on digital advertising [1, 2].

Despite the revenue decline, Baidu's net profit soared to HK$7.72 billion, a 33% year-over-year increase. The company attributed this growth to strong performance in its AI cloud business, which saw robust revenue growth [2].

Baidu's AI cloud business has emerged as a bright spot, helping offset the weakness in its core advertising segment. The company has also made strides in the autonomous driving market, partnering with Lyft and Uber to deploy Apollo Go robotaxis in Europe and Asia, respectively [2].

However, analysts remain cautious about Baidu's prospects. DBS maintains a Hold rating on Baidu Class A with a price target of HK$84.00, reflecting the company's mixed performance and the uncertain economic outlook in China [3].

The analyst consensus is also Hold, with a price target consensus of HK$90.00. Analysts expect continued pressure on Baidu's core advertising business and are uncertain about the near-term recovery in search advertising [2].

Baidu plans to launch Ernie 5.0, a new version of its foundation model, in the coming months, which could further enhance its AI capabilities. However, the company must navigate the challenges posed by the uncertain economic outlook in China and the growing competition in the AI market [1, 2].

References:
[1] https://www.freemalaysiatoday.com/category/business/2025/08/20/baidu-posts-quarterly-revenue-drop-as-consumption-flags
[2] https://parameter.io/baidu-inc-bidu-stock-profit-surge-cant-hide-advertising-reality-check/
[3] https://www.investing.com/news/stock-market-news/baidu-hk-shares-dip-as-q2-earnings-underwhelm-4203413