Daiwa still likes Baidu, just less loudly

Same story, different thermostat

Daiwa Securities just nudged Baidu’s forecast cooler on the advertising side, saying Q1 ad revenue should reflect more competition, ongoing AI transformation costs, and the usual seasonal wobble. In other words: the core business isn’t broken, but it’s definitely not throwing off fireworks either.

The AI cloud side gets the glow-up

Here’s the twist. Daiwa actually raised its estimate for Baidu’s AI cloud infrastructure revenue in Q1, pointing to solid external demand, the appeal of Kunlun chips, and better cost efficiency. So while one part of the business is coughing from the cold, the AI arm is still strutting around like it owns the place.

Earnings get trimmed, but the bull case survives

The firm largely left its Q1 revenue growth forecast alone, but it cut earnings per share estimates for 2026 through 2028 by 6% to 21% as Baidu’s business mix shifts. That’s analyst-speak for: the road to the future may be real, but the margin math is getting messier.

Still, Daiwa kept a Buy rating and held the price target at HK$175. For you, that means this isn’t a “run for the hills” note — it’s more of a reality check wrapped in a compliment.

Big picture: Baidu’s ad business is still the old cash cow, but the market is increasingly watching whether AI cloud can become the new one without eating too much profit along the way.