Baidu (09888.HK) shares plummeted 5.03% in intraday trading, as investors reacted to concerns about the company's advertising revenue. The sharp decline comes amid analyst projections of continued weakness in Baidu's core advertising business, despite progress in its artificial intelligence (AI) initiatives.

According to Citi analysts, Baidu's third-quarter core advertising revenue is expected to have dropped by 23% year-on-year. The outlook remains challenging, with a projected 19% decline in ad revenue for the fourth quarter. This persistent weakness in the company's traditional revenue stream is likely driving investor sentiment, overshadowing potential gains from Baidu's AI and cloud segments.

Despite the negative short-term outlook, Citi maintains a buy rating on Baidu stock. In a surprising move, the analysts have actually raised their target price to $166.00 from $143.00, citing recent share price gains. This long-term optimism, however, appears insufficient to counteract immediate concerns about the company's financial performance, as evidenced by today's sharp stock decline.