On November 19, Goldman Sachs issued a research report, noting that Baidu’s (09888.HK) third-quarter results were largely in line with projections. Notably, the robust growth in its cloud services sector effectively counterbalanced the downturn in advertising revenue. Company management revealed that revenue from AI-related new ventures in the third quarter surged by over 50% year-on-year, amounting to roughly RMB 10 billion and constituting around 40% of the total revenue. Goldman Sachs highlights that Baidu’s AI endeavors now encompass cloud infrastructure, chips, AI applications and agents, as well as autonomous driving, showcasing its comprehensive cross-ecosystem AI prowess.

Despite the likelihood of ongoing pressure on the traditional search advertising business in the upcoming quarters, Goldman Sachs projects that, propelled by the consistent and rapid expansion of AI-driven businesses, Baidu’s revenue will likely see a rebound in the fourth quarter and the following year. This is expected to be accompanied by a resurgence in net profit margins from the levels observed in the third quarter. Consequently, Goldman Sachs retains a Buy recommendation for Baidu, elevating its target price for Hong Kong-listed shares from HK$150 to HK$151, and for US-listed shares from US$154 to US$155.