Goldman Sachs has issued a research report maintaining its "Buy" rating on BIDU-SW (09888, BIDU.US). The firm believes that Baidu conducted a deep transformation of its search business in mid-2025. Driven by strong artificial intelligence demand and recurring subscription models, the cloud business should maintain robust performance. Baidu Apollo is rapidly expanding its fleet scale globally, and as the scale further expands and begins adopting profitable business models, the firm believes the market will start to favor its robotaxi business.

Goldman Sachs' main points are as follows:

As Baidu announces earnings after Hong Kong market close on August 20, the firm expects the market to focus on several key areas: First, whether there are signs of improvement in the search advertising business, particularly now that AI search accounts for the majority of search results; Second, AI initiatives and cloud business demand, namely the growth in AI training/inference demand and capital expenditure guidance for fiscal 2025. The company's recent efforts in the AI field, including AI agents/video generation models, represent another market focus point; Third, the robotaxi business, expected fleet expansion and overseas expansion prospects; Fourth, following the new CFO's appointment, updates on shareholder return policies and progress for fiscal 2025.

**Cloud Business** The firm expects cloud business revenue to grow 25% year-over-year in 2025, comparable to the cloud business growth rates of leading peers such as Alibaba Cloud and Tencent Cloud. While in earlier quarters, cloud business growth partially relied on project revenue (thus 2025 growth rates may be lower than the 42% in Q1), the firm observes that Q2 recurring/subscription-based revenue remained strong, driven by AI training/inference demand.

**Robotaxi Business** Over the past three months, Baidu Apollo has rapidly expanded its global business footprint through partnerships with Uber and Lyft, as well as robotaxi testing in the Middle East, Southeast Asia, and Europe. With the deployment of RT6 models, the firm expects its fleet scale to gradually expand this year (reaching 2,000-3,000 vehicles by the end of 2025), and a key focus for the company in the second half of 2025 is exploring asset-light models.

**Valuation** According to the firm's sum-of-the-parts (SOTP) valuation method, the advertising/search business currently accounts for approximately 30% of the group's value, based on a 5x P/E ratio. Given that Baidu's total net cash (including long-term investments) reaches 90% of its market capitalization, the firm believes its stock has limited downside risk. Following the new CFO's appointment, investors are expected to watch for further measures in share buyback and dividend policies.