A report from UBS indicates that Baidu-SW (09888) announced its fourth-quarter and full-year results for the period ended last December, with Q4 performance exceeding expectations. To better demonstrate its strategic direction to investors, the group has improved financial disclosures starting from the third quarter and continued to share key metrics driven by its AI business in Q4. Related revenue reached RMB 11.3 billion, increasing 48% year-on-year, accounting for 43% of Baidu's core business total revenue. UBS maintains its price target for Baidu (BIDU.US) at $180 for U.S. shares and HK$175 for H-shares, with a "Buy" rating for both.

Looking ahead to fiscal year 2026, UBS stated that as AI application adoption increases, product innovation continues, and usage scenarios expand, the group's AI business is expected to maintain strong growth, with its revenue proportion rising further. Although the group's share price has recently experienced volatility, UBS believes its sum-of-the-parts valuation framework remains solid. Given multiple future positive catalysts, such as the potential IPO of its Kunlun Chip unit and dividend announcements, the current share price offers an attractive risk-reward profile. Based on continued focus on operational efficiency, UBS has slightly raised its core non-GAAP operating profit margin estimates.