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Baidu Surges on AI Chip Boom
24 Nov
Summary
- JPMorgan upgraded Baidu stock to overweight, signaling significant upside.
- Cloud and AI are identified as future growth drivers for Baidu.
- Baidu's AI chips are expected to fuel substantial cloud revenue acceleration.
JPMorgan has initiated an "overweight" rating for Baidu, significantly raising its price target to $188 from $110, indicating a potential 69% increase in value. The upgrade stems from the expectation that cloud computing and artificial intelligence will become primary drivers of Baidu's future growth and financial performance.
Analyst Alex Yao believes the market is currently undervaluing Baidu's strategic pivot towards AI. He forecasts a dramatic acceleration in cloud revenue, projecting a rise to approximately 61% in 2026, a substantial increase from the 23% expected in 2025. This surge is attributed to strong demand for Baidu's proprietary Kunlun AI chips.
The company's AI-native marketing services are also poised for rapid expansion, with revenue anticipated to grow 55% year-over-year by 2026. Despite potential cannibalization of traditional search advertising, the intense domestic demand for AI compute and enterprise adoption of AI models underpin this optimistic outlook.
