Baidu (BIDU) Faces Ad Slowdown but Gains From AI Cloud Growth

Baidu, Inc. (NASDAQ:BIDU) is one of the AI Stocks Analysts Are Tracking Closely. On August 21, Benchmark analyst Fawne Jiang lowered the price target on the stock to $115.00 (from $120.00) while maintaining a Buy rating.

The price target cut reflects the challenges Baidu is facing in its core advertising business, witnessing a 15% year-over-year revenue decline in the second quarter of 2025. With GenAI search monetization still in early stages, the second-quarter ad outlook was “muted”.

On the other hand, the company’s non-advertising revenue continues to gain traction, accounting for an estimated 40% Baidu Core. This is driven by strong AI Cloud growth, which expanded 34% year-over-year in the first half of 2025, as well as subscription-based revenue for improved stability.

The firm also talked about the company’s autonomous driving service, Apollo Go, which is demonstrating strong performance.

“Apollo Go adds further depth, with fully driverless rides up 148% y/y and global expansion gaining pace through partnerships with Uber and Lyft. While the combination of soft ad trends and continued AI investment may weigh on margins near term, management’s focus on cost efficiency and disciplined execution should help to mitigate the impacts. We believe that the upcoming launch of ERNIE 5.0 and rising engagement with AI-powered search reinforce Baidu’s pivot toward a more diversified, innovation-led model, though execution remains key in this evolving landscape.”

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.

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