BofA Securities slashed Baidu’s target price to HK$224, expects Q2 core revenue to rise 12% on year

 

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Baidu will have sufficient semiconductor chip inventory for training and upgrading foundation models, BofA Securities said in a note after a recent meeting with Baidu’s management.

The broker remained upbeat on Baidu’s potential in AI app development and the prospects for upgrades on other products, due to its optimization of algorithm, framework, and model, it said.

Baidu’s core business revenue is expected to grow by 12% year over year to 25.9 billion yuan in the second quarter, while its non-GAAP operating profit will rise by 19% to 6.1 billion yuan, it said, adding that Baidu’s cloud-computing revenue is likely to balloon 7%.

Powered by the recovery of major sectors such as healthcare, commercial services, local life services, tourism and e-commerce, Baidu’s core advertising revenue should grow by 12% on year in the quarter, on the back of its core business capabilities and advantages in AI development, it said.

The broker reiterated the Buy rating on Baidu, but cut the target price from HK$230 to HK$224 due to the yuan’s depreciation.