BAIDU : 1Q26 post view: A strong dose of confidence

研报英文原文证据摘录

BAIDU : 1Q26 post view: A strong dose of confidence

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INTERNET & MEDIA

BAIDU OUTPERFORMPRICE* HKD134.7  TARGET PRICE HKD169 (UPSIDE 25%) TARGET 4%PRICE EPS 3%26e EPS 2%27e

BAIDU ADR OUTPERFORMPRICE* USD137.7  TARGET PRICE USD174 (UPSIDE 26%) TARGET 5%PRICE EPS 3%26e EPS 2%27e

1Q26 post view: A strong dose of confidence

Decade-long investments in AI are being paid off19 MAY 2026

Securities Research Report We view Baidu’s 1Q26 earnings as evidence of its long-time AI investments being monetised,

Production time: 09:41* (London time) particularly reflected by the 79%/184% y-y growth of AI Cloud Infra/GPU Cloud revenue. While

Research Analysts & Publishing Entities management does not guide further acceleration, partially given that 79% is a very fast-growing pace

Colin LIU even in absolute terms, they are confident about the current demand outlook in China. Management

BNP Paribas Securities (Asia) Limited also highlighted they are more focused on cloud execution to avoid the q-q growth volatility as+852 2825 1083

colin.liu@asia.bnpparibas.com experienced in 2025. Regarding margins, management highlighted that the GPU Cloud, mostly

catering to AI demand, has a higher gross margin than non-AI cloud, which should help Baidu’s cloud

OPM to be on par with the industry leaders’ margin profile over the long-term.

Profitability should stabilise in the next few quarters

With opex coming down notably y-y, Baidu managed to maintain its core non-GAAP core OPM at

c15% in 1Q26 despite legacy business revenue declining by 30% y-y. We believe it is not only from

the one-off layoffs done in 4Q25 and reflects Baidu’s continued determination to improve operational

efficiency. We now forecast Baidu’s legacy business revenue to decline 25% y-y in 2026 as it is too