--- title: "BofA cuts Baidu on ads as four banks brace for 99% AI cloud growth" description: "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." publisher: "The Inference" section: "Applications" published: 2026-10-26T13:12:57.834Z modified: 2026-10-26T13:12:57.834Z canonical: https://theinference.org/article/bofa-cuts-baidu-on-ads-as-four-banks-brace-for-99-ai-cloud-growth language: en keywords: "Baidu, Analyst Ratings, AI Cloud, Advertising, Bank Of America" --- # 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. ## One company, two verdicts in three days [Bank of America](https://theinference.org/markets/companies/bank-of-america) [cut its price target](https://uk.investing.com/news/stock-market-news/bofa-cuts-baidu-stock-price-target-on-weaker-ad-business-outlook-93CH-4930595) on [Baidu](https://theinference.org/markets/companies/baidu) 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](https://theinference.org/markets/companies/citigroup), 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 [3][4]. 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](https://seekingalpha.com/article/4940350-baidu-q2-ai-infrastructure-gaining-momentum-but-search-faces-structural-pressure) [5]. On UBS's reading, the cloud comes free. *Chart: **Baidu's two engines point opposite ways: ads down 19%, AI cloud guided toward 99%** Bar chart of Baidu year-over-year revenue growth: online marketing down 19 percent in Q2 2026, AI cloud infrastructure up 50 percent in Q2 2026 and expected up 90 to 99 percent in Q3 2026.* *Year-over-year revenue growth in percent. Q2 2026 as reported by Baidu; the Q3 bar is the Citi, Daiwa, UBS and Nomura preview range, with Citi's 99 percent at the top. [2][3][4]* ## 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](https://finance.yahoo.com/quote/BIDU.BA/earnings/BIDU.BA-Q2-2026-earnings_call-673679.html) 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](https://theinference.org/markets/companies/factset) counts 30 of 36 covering institutions at Buy [2], which makes the ad-led case the contrarian position. *Chart: **Ten quarters, one flat line: the cloud surge has not moved total revenue** Line chart of Baidu total revenue in US dollars per quarter from Q1 2024 to Q2 2026, holding between roughly 4.4 and 4.8 billion dollars.* *Ten quarters, one flat line: the cloud surge has not moved total revenue [8]* ## The print that settles it Baidu has posted no third-quarter date; last year [the report landed on November 18](https://finance.yahoo.com/news/baidu-report-third-quarter-2025-090000908.html) [6][7]. Institutions list a first-ever dividend and progress on a spin-off listing of Kunlunxin, the chip unit [2][4], alongside a Hong Kong dual-primary listing management expects effective this year [4]. The AI-cushion shrink we [reported on October 15](https://theinference.org/article/baidu-s-ai-cushion-shrank-8-its-defense-is-a-siri-slot-apple-has-not-shipped) is the same segment now expected to nearly double [2][4][4]. If 90 to 99 percent prints, the cut ages badly; if the cloud misses, there is no advertising engine left to catch the stock [2][4][4]. ## Takeaway Bank of America and four Asia-focused banks now read the same Baidu income statement opposite ways: ads fell 19 percent while AI cloud is forecast to nearly double, and the third-quarter print decides which camp owns the stock. ## Sources 1. [Investing.com UK (Reuters), "BofA cuts Baidu stock price target on weaker ad business outlook", 26 October 2026](https://uk.investing.com/news/stock-market-news/bofa-cuts-baidu-stock-price-target-on-weaker-ad-business-outlook-93CH-4930595) 2. [GMT Eight, "Four major banks maintain Buy rating on Baidu (09888), expecting AI cloud infrastructure revenue to grow 90%-99% in the third quarter", 24 October 2026](https://www.gmt8press.com/content/detail/444089) 3. [Insider Monkey via Yahoo Finance, "Citi Sees a New Catalyst for Baidu as Its AI Infrastructure Business Grows", 3 September 2026](https://finance.yahoo.com/technology/ai/articles/citi-sees-catalyst-baidu-ai-035954307.html) 4. [Baidu Q2 2026 earnings call transcript (Quartr via Yahoo Finance), 18 August 2026](https://finance.yahoo.com/quote/BIDU.BA/earnings/BIDU.BA-Q2-2026-earnings_call-673679.html) 5. [Seeking Alpha, "Baidu Q2: AI Infrastructure Is Gaining Momentum, But Search Faces Structural Pressure", 26 August 2026; BIDU price and market-cap data as of the 23 October 2026 close](https://seekingalpha.com/article/4940350-baidu-q2-ai-infrastructure-gaining-momentum-but-search-faces-structural-pressure) 6. [Baidu via PR Newswire (Yahoo Finance), "Baidu to Report Third Quarter 2025 Financial Results on Nov 18, 2025", 21 October 2025](https://finance.yahoo.com/news/baidu-report-third-quarter-2025-090000908.html) 7. [Baidu Investor Relations, Events and Presentations calendar, retrieved 26 October 2026 (no upcoming events posted)](https://ir.baidu.com/events-and-presentations) 8. [Baidu quarterly figures from its SEC filings, retrieved 26 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001329099) --- BofA cuts Baidu on ads as four banks brace for 99% AI cloud growth — The Inference. Canonical: https://theinference.org/article/bofa-cuts-baidu-on-ads-as-four-banks-brace-for-99-ai-cloud-growth