Goldman Sachs: Maintain a "buy" rating on BIDU-SW (09888), focusing on artificial intelligence initiatives and expansion of unmanned taxi businesses.

Goldman Sachs Group, Inc. released a research report stating that they are maintaining a "buy" rating for BIDU-SW (09888, BIDU.US). The company believes that Baidu Inc Sponsored ADR Class A has undergone a deep reshaping of its search business by mid-2025. With strong demand for artificial intelligence and the drive towards a subscription model, the cloud business is expected to remain robust. Baidu Inc Sponsored ADR Class A's Apollo is rapidly expanding its fleet globally, and as the scale further expands and starts adopting a profitable business model, the company believes the market will start to favor its autonomous taxi business. Goldman Sachs Group, Inc.'s main points are as follows: Following the release of Baidu Inc Sponsored ADR Class A's performance after the close of the Hong Kong stock market on August 20, the company expects the market to focus on the following key points: firstly, whether there are signs of improvement in the search advertising business, especially now that artificial intelligence search results make up a large part of the search results; secondly, artificial intelligence initiatives and cloud business demand, such as growth in artificial intelligence training / inference needs and capital expenditure guidance for the 2025 fiscal year, the company's recent efforts in the field of artificial intelligence, including AI models for intelligent bodies/videos, are another focus of the market; thirdly, the autonomous taxi business, including the expected expansion of the fleet size and overseas expansion prospects; and fourthly, the latest developments in shareholder return policy since the appointment of the new CFO and progress in the 2025 fiscal year. Cloud Business It is expected that cloud business revenue will increase by 25% year-on-year in 2025, comparable to leading competitors such as Alibaba Cloud and Tencent Cloud. While in earlier quarters, part of the growth in cloud business relied on project income (therefore the growth rate in 2025 may be lower than the 42% in the first quarter), the company sees that in the second quarter, revenue based on cycles/subscriptions remains strong, driven by demand for artificial intelligence training/inference. Autonomous Taxi Business In the past three months, Baidu Inc Sponsored ADR Class A's Apollo has rapidly expanded its business globally through partnerships with Uber Technologies, Inc. (Uber), Lyft, and autonomous taxi testing in the Middle East, Southeast Asia, and Europe. With the deployment of the RT6 model, it is expected that the fleet size will gradually increase this year (reaching 2000-3000 by the end of 2025), and a key focus for the company in the second half of 2025 is to explore a light asset model. Valuation According to the company's sum-of-the-parts valuation (SOTP), the current advertising/search business accounts for approximately 30% of the group's value, based on a 5x P/E ratio. Due to Baidu Inc Sponsored ADR Class A's net cash total (including long-term investments) reaching 90% of market value, the company believes there is limited downside to its stock price. It is expected that after the appointment of the new CFO, investors will focus on whether the company will take further steps in stock buybacks and dividend policies.