Baidu's Profitability Likely to Face Pressure in 3Q on AI Investment
Dow Jones
Aug 19
Baidu's profitability is likely to face pressure in 3Q on artificial-intelligence investment, according to Daiwa analyst John Choi in a research note. AI search monetization remains intentionally restrained against intense price competition, the analyst says. He adds that Baidu is prioritizing user experience, product quality and user AI adoption, which will likely weigh on near-term advertising revenue.
Daiwa keeps its buy rating, but cuts the target price to $165.00 from $175.00 for its ADRs. Downside risks include a slower-than-expected chip unit IPO, and faster-than-expected capital expenditure expansion. Its ADRs last traded at US$90.87.
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