Search Monetization Slips: Why Baidu's (BIDU) AI Is a Double-Edged Sword

Baidu, Inc. (NASDAQ:BIDU) is one of the AI Stocks Investors Should Keep an Eye On. On July 30, Tiger Securities maintained Buy on the stock and cut the price target to $100.00 (from $110.00). The price target cut follows the firm’s downward revision of Baidu’s revenue and profit estimates driven by AI-driven drags from search monetization.

According to the firm, there have been challenges with monetizing AI-generated search results. These now account for an estimated 50% of total queries.

“We are maintaining our BUY rating but lowering PT to $100 (from $110) as we revise down our revenue and profit estimates to reflect the ongoing drag from AI-driven changes in search monetization. AI-generated search results now account for approximately 50% of total queries, up from 35% in April, while the monetization model remains in the testing phase. Additionally, the consolidation of YY is expected to weigh on BIDU’s advertising revenue, as YY was previously one of BIDU’s top advertising clients. As a result, we are lowering our 2025 ad revenue forecasts."

A modern internet space with a person using Baidu services on a laptop.

"Given that advertising is BIDU’s primary profit driver, we are also revising down our profit estimates. Specifically, we now expect core advertising revenue to decline 18% y/y in 2Q and 3Q, with core non-GAAP operating income down 45% and 44% y/y, respectively. On a more positive note, we are maintain our forecast of +25% year-over-year growth in 2Q cloud revenue, and we are raising our estimate for other revenue to reflect the consolidation of YY”.

Baidu, Inc. (NASDAQ:BIDU) is a Chinese internet giant and AI pioneer, known for its noteworthy investments in artificial intelligence technology and its position as the dominant search engine within the country.

While we acknowledge the potential of BIDU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Must-Watch AI Stocks on Wall Street and 10 AI Stocks Making Waves on Wall Street Disclosure: None.