Citigroup: Baidu's quarterly performance exceeds expectations, raises target price by 9%

Citigroup said that in the background of lower market expectations, Baidu's third-quarter performance exceeded expectations; its online marketing service revenue decreased year-on-year, but the growth in cloud revenue offset it. Analysts Alicia Yap and others stated in the report that the improvement in operational indicators and AI revenue disclosure, combined with Baidu's continued investment in upgrading the Wenxin AI model. With the deployment of AI agents and the release of value through shareholder returns, investors are expected to have more confidence in its operational prospects and stock performance. It is expected that Baidu's core revenue in the fourth quarter will decrease by 1.4% year-on-year, with marketing service revenue decreasing by 12.5%, but AI cloud revenue growing by 15%; the target price has been raised from $166 to $181, maintaining a buy rating, due to the positive development of cloud business and autonomous ride-hailing.