John Deo

Baidu's AI & Cloud Growth Impresses, Mizuho Raises Price Target

  • click to rate
    Posted by John Deo Feb 19 - Filed in General - #financialmodelingprep  - 20 views

    Baidu Inc. (NASDAQ: BIDU) is gaining traction in cloud computing and generative AI, offsetting challenges from China's uneven macroeconomic recovery. Analysts at Mizuho (NYSE: MFG) have raised their price target to $105 from $95, citing strong AI-driven growth.

    Key Highlights from Mizuho’s Analysis

    • Cloud revenue surged 26% YoY in Q4, reflecting broader AI adoption.
    • Generative AI contributes a double-digit percentage of total revenues.
    • ERNIE 4.5 model shift toward open-source could accelerate adoption, mirroring DeepSeek’s strategy.
    • Daily API calls for ERNIE LLM skyrocketed to 1.65 billion in December (from 50 million a year earlier).
    • 2026 core EBITDA forecast raised by 5% to 31 billion yuan on AI monetization and macro support.

    AI & Search Monetization Boost Outlook

    Despite a 7% decline in advertising revenue, Mizuho expects gradual improvement in 2025, fueled by:
    \u2714\ufe0f AI-driven search monetization
    \u2714\ufe0f Macroeconomic policy stimulus
    \u2714\ufe0f Cloud expansion contributing $30 per share

    What’s Next for Baidu?

    While U.S.-listed Baidu shares fell 7.5% on Tuesday, analysts still see AI as a "free call option" at current levels. Seasonal softness due to Lunar New Year is expected, but a year-over-year revenue recovery is likely.

    Relevant Financial APIs for Deeper Insights

    Final Thoughts

    Baidu’s strategic push in generative AI and cloud computing positions it well for future growth, despite near-term geopolitical concerns. AI adoption remains a key catalyst for both revenue and valuation upside.