On July 14, Baidu fell 5.32% in regular trading, trading at $107.29/share, with turnover of $108 million. The decline was triggered by multiple investment bank downgrades and broader AI chip sector weakness.

Morgan Stanley cut Baidu's target price from $140 to $130, maintaining a neutral rating, while reducing 2026-2027 operating profit forecasts by 11-12%. The firm expects Q2 core advertising revenue of approximately 13 billion RMB, representing an 18.5% year-over-year decline, primarily due to a weak macro environment and AI transformation diverting traditional advertising traffic. Additionally, Barclays lowered its target price from $128 to $124, maintaining an equal-weight rating, while Bank of America maintained its buy rating.

The AI chip sector faced broad-based selling pressure as Fidelity International, BlackRock, and other major institutions warned about the sustainability of related stock rallies. Index concentration and leveraged bets have amplified volatility. Goldman Sachs noted that sustained H-share recovery hinges on earnings rather than valuation, with AI capital expenditure continuing to compress profit margins across the internet sector.

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