In a global research report issued on May 22, HSBC highlighted that Baidu Inc. (09888) has demonstrated robust growth in its intelligent cloud segment, while adopting a cautious stance on the expansion of its high-margin advertising business. This combined outlook could exert pressure on the company's profit margins. Consequently, HSBC has adjusted its 2025-2027 adjusted net income forecasts for Baidu downwards by 4-10% and reduced its target price by 8.7% to HK$81.9. Nonetheless, recognizing Baidu's long-term growth potential in AI monetization and autonomous ride-hailing, HSBC has maintained its 'Hold' rating. HSBC anticipates that Baidu will prioritize enhancing the share of AI search in total queries and gradually capitalize on advertising demand. Despite a 1-6% reduction in core advertising revenue forecasts for 2025-2027, the positive outlook for the intelligent cloud business results in minimal impact on overall revenue projections for 2026-2027. Furthermore, HSBC expects Baidu's intelligent driving business losses to shrink significantly this year, fueled by a projected surge in ride-hailing service orders over the coming quarters.