BofA cuts Baidu on ads as four banks brace for 99% AI cloud growth
Bank of America trimmed its Baidu target on a weakening ad business on October 26, two days after Citi, Daiwa, UBS and Nomura held Buy ratings on forecasts of 90 to 99 percent AI cloud growth. The third-quarter report decides which camp owns the stock.
Vincent Jiang · 2 min read
One company, two verdicts in three days
Bank of America+0.70% — Bank of America, up 0.70 percent today cut its price target on Baidu+1.75% — Baidu, up 1.75 percent today on October 26, blaming a weaker advertising business 1. The replacement figure does not appear in the copy received. Two days earlier, on October 24, Citi+0.92% — Citi, up 0.92 percent today, Daiwa, UBS and Nomura had all held Buy ratings in third-quarter previews, forecasting AI cloud infrastructure revenue up 90 to 99 percent year on year, against 50 percent growth in the second quarter 2. Six banks, one income statement, opposite conclusions.
The cloud camp has contracts and a cash floor
Citi's number is the sharpest: third-quarter AI cloud infrastructure revenue of RMB 8.35 billion, up 99 percent, with a further 14 percent sequential rise expected in the fourth quarter 2. The second quarter's actual was RMB 7.3 billion, up 50 percent, with GPU cloud revenue nearly quadrupling at 283 percent 34.
Daiwa adds that large customers have locked in GPU capacity through multi-year prepaid contracts 2. UBS supplies the floor: the market value sits below total net cash and investments 2, and Baidu's own ledger showed RMB 283.1 billion of cash and investments at June 30 4 against a $26.4 billion market value 5. On UBS's reading, the cloud comes free.
Baidu's two engines point opposite ways: ads down 19%, AI cloud guided toward 99%
- Estimate
Data
| Value | Range | |
|---|---|---|
| Online marketing, Q2 2026 | -19% | — |
| AI cloud infra, Q2 2026 | 50% | — |
| AI cloud infra, Q3 2026, bank previews (estimate) | 99% | 90–99% |
BofA is pricing the half that shrinks
The ad engine, the other half of core revenue, fell 19 percent in the second quarter 3, and management said on the August 18 call that pressure would persist through the second half because Baidu is deliberately holding back monetization of its AI search 4. Total revenue still slipped 4 percent to RMB 31.3 billion 3. The ADS closed at $77.20 on October 23, about half the $150.50 it touched in the past six months 5. FactSet−3.02% — FactSet, down 3.02 percent today counts 30 of 36 covering institutions at Buy 2, which makes the ad-led case the contrarian position.
Ten quarters, one flat line: the cloud surge has not moved total revenue
Data
| Revenue | |
|---|---|
| Q1 '24 | $4.37B |
| Q2 '24 | $4.67B |
| Q3 '24 | $4.78B |
| Q4 '24 | $4.68B |
| Q1 '25 | $4.47B |
| Q2 '25 | $4.57B |
| Q3 '25 | $4.38B |
| Q4 '25 | $4.68B |
| Q1 '26 | $4.65B |
| Q2 '26 | $4.61B |
The print that settles it
Baidu has posted no third-quarter date; last year the report landed on November 18 67. Institutions list a first-ever dividend and progress on a spin-off listing of Kunlunxin, the chip unit 24, alongside a Hong Kong dual-primary listing management expects effective this year 4. The AI-cushion shrink we reported on October 15 is the same segment now expected to nearly double 244. If 90 to 99 percent prints, the cut ages badly; if the cloud misses, there is no advertising engine left to catch the stock 244.
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