GTHT has released a research report adjusting BIDU-SW's (09888) revenue forecasts for 2025-2027 to RMB130.7/138.5/149.2 billion (previously RMB130.4/137.9/140.3 billion), with adjusted net profit of RMB17.6/20.2/29.8 billion (previously RMB26.1/27.1/29.2 billion). Based on an exchange rate of HK$1 = RMB0.91 and SOTP valuation method, GTHT has adjusted BIDU-SW's target price to HK$176, maintaining a "Buy" rating.

GTHT's main viewpoints are as follows:

**AI Performance Continues to Improve, Strengthening Empowerment Across Businesses**

Baidu has released the deep reasoning model ERNIE X1.1, which compared to the X1 version, shows a 34.8% improvement in factuality, 12.5% improvement in instruction following, and 9.6% improvement in intelligent agents. Benchmark tests show overall performance comparable to GPT-5 and Gemini 2.5 Pro, with training using an iterative (chain of thought + chain of action) hybrid reinforcement learning framework.

Leveraging its self-developed AI models, multiple Baidu businesses have been empowered: In July, AI-generated content accounted for 64% of search business; AI drives intelligent cloud development; AI also assists digital humans and empowers advertising business.

**Kunlun Chips Open New Growth Curve Through AI Acceleration Chips**

Since 2025, Kunlun has achieved multiple technological breakthroughs and secured several large orders. The flagship chip Kunlun P800, based on the self-developed XPU-P architecture, features excellent memory specifications and is more friendly to MoE model architectures.

In March, Kunlun servers won the bid for China Merchants Bank's AI chip project, with P800 providing full support for the bank's large model deployment. At Baidu's AI Developer Conference in April, Baidu announced the launch of a 30,000-card cluster and introduced super nodes capable of accommodating 32/64 Kunlun AI acceleration cards, significantly improving MoE training performance and inference efficiency. On September 25, Kunlun won the largest share in China Mobile's AI procurement project, with an order value reaching one billion yuan.

These achievements not only verify Kunlun's technical strength and market competitiveness but also lay the foundation for its subsequent expansion of application scenarios and opening of new growth curves.

**Apollo Go Accelerates Overseas Business Expansion**

On September 24, Apollo Go obtained Dubai's first autonomous driving test permit. The cooperation agreement signed between Baidu and Dubai in March mentioned the initial deployment of over 1,000 unmanned Robotaxis in Dubai.

In Asia, Apollo Go has been testing in Hong Kong since the end of 2024 and gradually expanding coverage. On September 26, Baidu stated it is in talks with governments in Southeast Asia and Australia regarding the introduction of Robotaxis. Additionally, partnerships with Uber and Lyft in July have also facilitated Apollo Go's overseas deployment.

Currently, total orders have exceeded 14 million. With overseas expansion, Robotaxis are expected to become an important driver of Baidu's non-advertising revenue growth.