Guosheng Securities has reiterated its "Buy" rating on Baidu Group-SW, highlighting the emerging advantages of its full-stack AI architecture encompassing chips, cloud, models, and applications, as well as the scaling of its Kunlun AI chips.

The firm forecasts Baidu's revenue for 2026-2028 to reach RMB 132.3 billion, RMB 144.3 billion, and RMB 159.6 billion, respectively, with non-GAAP net profit attributable to shareholders projected at RMB 17.3 billion, RMB 21.0 billion, and RMB 24.7 billion.

Based on a 19x 2027 estimated P/E multiple for Baidu's overall business and the valuation of its equity investments, Guosheng sets a target price of HK$157 for the company.

**Baidu Group-SW (BIDU-SW)**

Baidu reported first-quarter 2026 revenue of RMB 32.1 billion.

Within this, its core Baidu business revenue was RMB 26.0 billion, up 2% year-over-year.

This segment consists of core AI new business, traditional business, and others, generating revenues of RMB 13.6 billion, RMB 10.2 billion, and RMB 2.2 billion, respectively.

Non-GAAP operating profit and net profit for the core business were RMB 4.0 billion and RMB 4.4 billion, corresponding to non-GAAP operating and net profit margins of 15% and 17%.

IQiyi contributed revenue of RMB 6.2 billion.

Group-wide non-GAAP operating profit and net profit were RMB 3.8 billion and RMB 4.3 billion, with margins of 12% and 14%.

Core AI new business revenue grew rapidly, now accounting for over 50% of the core business.

This quarter, core AI new business's share of Baidu's core revenue increased further to 52%.

By revenue breakdown: 1) Intelligent cloud infrastructure revenue was RMB 8.8 billion, surging 79% year-over-year, with GPU cloud revenue up 184%.

2) AI application revenue was RMB 2.5 billion, flat year-over-year.

3) AI-native marketing services revenue was RMB 2.3 billion, up 36%.

As of March 2026, Baidu App's monthly active users reached 655 million.

In intelligent driving, Apollo Go's fully driverless ride-hailing orders reached 3.2 million for the quarter, growing over 120% year-over-year.

By April 2026, Apollo Go had cumulatively provided over 22 million autonomous ride-hailing orders to the public.

Its global footprint covers 27 cities, with operations launched in multiple districts of Dubai, and testing with Uber and Lyft in London is expected to commence.

Profitability-wise, Apollo Go has achieved unit economics balance in its largest domestic operating city, with profitability expected to strengthen further as overseas operations scale.

Demand for Kunlun AI chips remains robust, with multiple 10,000-card clusters already delivered, and the Tianchi 256-card super-node is set for launch in June.

Baidu AI Cloud has become the infrastructure partner for major companies in industries like embodied AI and autonomous driving.

In May, Baidu launched the Ernie 5.1 model, which offers enhanced text and reasoning capabilities with a more compact size.

It ranked first in China and fourth globally on the LMArena text search leaderboard.

Going forward, Baidu will continue investing in model R&D, tailoring large models of appropriate sizes based on product needs and business scenarios.

Risks include slower-than-expected chip iteration, weaker-than-expected AI demand, and slower-than-expected robotaxi expansion.