Citi says Baidu's AI business likely kept strong momentum in third quarter
Citi expects Baidu's AI business to have sustained solid growth in the third quarter, but cut its ADR target price to $154 from $166.
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what happened
According to Market Talk, citing a research note from Citi analysts, Baidu's AI business likely maintained solid momentum in the third quarter. The bank expects AI cloud infrastructure revenue to grow 99% year on year, supported by strong demand for AI services.
At the same time, Citi warns of downside risks to the consensus forecast for Baidu's net profit, given heavy spending on model training and AI applications. For the fourth quarter, the bank expects AI cloud infrastructure revenue to rise 14% sequentially.
Citi keeps its buy rating, citing undemanding valuation and several upcoming catalysts, including the announcement of the company's first-ever dividend. The bank cut its ADR target price to $154 from $166 due to a de-rating across the sector. The ADRs last traded at $77.98.
why it matters
For investors following Baidu and China's internet sector, profit and AI spending remain the key variables, as higher investment can weigh on earnings even when revenue grows. The target cut reflects a re-rating of the sector rather than a change in Citi's revenue outlook for the company.
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- Baidu's AI Business Likely Maintained Solid Momentum in 3Q — Market Talk, 23 October 2026 at 03:43 UTC
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