Goldman Sachs lifts Baidu target on AI and cloud growth prospects

Investing.com -- Goldman Sachs raised its price target on Baidu to $154 from $90 in a note on Friday, while maintaining a Buy rating on the stock, citing growing confidence in the company’s non-search businesses.

“We believe the decline trajectory of Baidu’s search business is well understood by the market and reflected in street earnings estimates,” Goldman Sachs analyst Lincoln Kong wrote.

The bank expects third-quarter 2025 to show the steepest pressure, with “a 70% yoy core OP decline” from advertising deleveraging.

However, Goldman Sachs noted that investor sentiment has shifted. “With a 40% increase in market cap since our Asia Leaders Conference on Sep 3-4, we believe the market is now reassessing the SOTP potential for Baidu,” Kong said.

The firm highlighted growth accelerants from artificial intelligence, projecting that non-search revenue will make up 54% of Baidu’s core revenue by 2027, with cloud accounting for 36%.

According to Goldman Sachs, Baidu Cloud’s “core competency lies in its full stack capabilities from chips, platforms to AI empowered software applications.”

The analysts raised their valuation multiple to 5x price-to-sales to “reflect the growth potential and to align with the peer group.”

The bank also turned more constructive on Baidu’s Apollo Robotaxi business, citing “faster fleet rollout, higher industry TAM, and better profitability of the lower BOM cost RT6 car, as well as its international expansion potential.”

Goldman Sachs added that Baidu’s “proactive measures/views on enhancing shareholder buybacks and dividends” further support its sum-of-the-parts valuation.

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