Baidu.com: AI becomes the Core; Well positioned to capture the strong AI cloud infra demand

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Baidu.com: AI becomes the Core; Well positioned to capture the strong AI cloud infra demand

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Baidu.com

AI becomes the Core; Well positioned to

capture the strong AI cloud infra demand

Reiterate Rating: BUY | PO: 180.00 USD | Price: 135.33 USD

Strong demand for AI cloud, Kunlunxin AI chip 19 May 2026

Baidu’s AI Cloud Infra revenue grew 79% YoY to 8.8bn in 1Q. The growth rate is a strong Equity

beat to cons’ 40% and acceleration from FY25’s 34% YoY. The Total AI Cloud revenues

(=AI Cloud Infra+ AI Applications) grew 52% YoY, above Alibaba Cloud external revenue’s

Key Changes40%. The growth is driven by accelerating AI adoption and demand for training and

inference across diverse industries and workloads. Among Baidu’s cloud business, the (CNY) Previous Current

subscription-based GPU cloud has higher margin and its growth accelerated to 184% 2028E EPS NA 70.85

YoY in 1Q. Mgmt. is confident to continue outgrow the market and expand cloud margin

on mix shift to GPU cloud. Mgmt. sees strong demand for its AI chip Kunlunxin, with a Miranda Zhuang, CFA >>

Research Analyst

growing number of customers across different industries. This reflects growing market Merrill Lynch (Hong Kong)

recognition of Kunlunxin's stability, efficiency, compatibility, and versatility. +852 3508 2879 miranda.zhuang@bofa.com

1Q beat; AI businesses > half of revenue, cloud offsets ad JoannaResearchDuAnalyst>>

Baidu General Business’ 1Q revenue of RMB26bn (+2% YoY) bests consensus by 4%, Merrilljoanna.du@bofa.comLynch (Hong Kong)

driven by the beat in cloud, while ad’s -22% YoY decline missed expectation. AI-powered Alex Liu >>

businesses revenue grew 49% YoY to 13.6bn in 1Q, representing 52% of Baidu General Research Analyst

Business. Adj.