In a report released on June 5, BOCOM International emphasized that Baidu's (09888.HK) search advertising revenue is anticipated to endure AI-related challenges this year. The report anticipates an 11% and 12% year-over-year decline in Baidu's search advertising revenue during the second and third quarters, respectively. While there may be a slight narrowing of this decline in the fourth quarter, uncertainty lingers. Overall, full-year advertising revenue is projected to drop by 9% year-over-year, reaching RMB 66 billion. Moreover, the report cautions that Baidu's profit might suffer due to the unpredictability of its advertising revenue, with the operating profit margin of its core business forecast to decline to 14.8% in the second quarter. The full-year operating profit margin is also expected to decrease by 1.4 percentage points from previous estimates, to 17.8%. Utilizing SOTP valuation, BOCOM International has retained its target price for Baidu Group at HK$96. The bank underscores Baidu's leading position in cloud services and autonomous driving, viewing these areas as pivotal for enhancing the group's valuation. Consequently, it recommends closely monitoring the sustainability of Baidu Cloud's revenue growth and the advancements in the global promotion of Robotaxi. BOCOM International maintains its 'Buy' rating for Baidu.