Company Coverage
Baidu Inc (9888 HK): 2Q26: Earnings Miss; AI Growth Accelerates, But Sustainability Remains To Be Proven
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$101.10
HK$145.00
43.4%
HK$186.00
Analyst
Highlights
- Baidu’s 2Q26 results were below expectations. Revenue declined 4.2% yoy to Rmb31.3b, slightly below our estimates. Gross margin contracted
4.9ppt yoy to 39%, in line with our estimates but missing consensus expectations. Non-GAAP operating profit fell 14.8% yoy to Rmb3.8b, with
non-GAAP operating margin at 12.1%. Meanwhile, non-GAAP net profit declined 46.3% yoy to Rmb2.6b, significantly below our and consensus
forecasts.
- Maintain BUY with a slightly lower target price of HK$145.00 (US$148.00).
Analysis
- Top-line pressure persisted in 2Q26 despite solid AI growth. Baidu Inc’s (Baidu) revenue dipped 4.2% yoy to Rmb31.3b in 2Q26 (1Q26: +4% yoy).
Baidu Core AI-powered revenue reached Rmb12.5b in 2Q26, up 25% yoy, accounting for 50% of Baidu’s general business revenue vs 52% in 1Q26. Revenue from AI Cloud Infra surged 50% yoy to Rmb7.3b in 2Q26, while revenue from GPU Cloud increased by 283% yoy. AI applications revenue reached Rmb2.5b in 2Q26, up 3% yoy. Total online marketing revenue dropped 19% yoy to Rmb13.1b, while revenue from AI-native marketing
services including agents and digital humans reached Rmb2.6b, remaining flat yoy vs 36% yoy in 1Q26.
• Solid progress in Apollo Go. Apollo Go continued to expand internationally in 2Q26, commencing open-road testing in London with Uber and Lyft, launching fully driverless commercial operations in Dubai, and obtaining Hong Kong’s first permits for fully driverless testing. Apollo Go also
conducted open-road testing in Switzerland with PostBus and signed an MoU to explore autonomous ride-hailing services in Kazakhstan. To date, Apollo Go's global footprint has reached 28 cities, and its fleets have accumulated over 350m autonomous kilometers, including over 240m fully driverless autonomous kilometers.
Highlights
- Baidu’s 2Q26 results were below expectations. Revenue declined 4.2% yoy to Rmb31.3b, slightly below our estimates. Gross margin contracted
4.9ppt yoy to 39%, in line with our estimates but missing consensus expectations. Non-GAAP operating profit fell 14.8% yoy to Rmb3.8b, with
non-GAAP operating margin at 12.1%. Meanwhile, non-GAAP net profit declined 46.3% yoy to Rmb2.6b, significantly below our and consensus
forecasts.
- Maintain BUY with a slightly lower target price of HK$145.00 (US$148.00).
Analysis
- Top-line pressure persisted in 2Q26 despite solid AI growth. Baidu Inc’s (Baidu) revenue dipped 4.2% yoy to Rmb31.3b in 2Q26 (1Q26: +4% yoy).
Baidu Core AI-powered revenue reached Rmb12.5b in 2Q26, up 25% yoy, accounting for 50% of Baidu’s general business revenue vs 52% in 1Q26. Revenue from AI Cloud Infra surged 50% yoy to Rmb7.3b in 2Q26, while revenue from GPU Cloud increased by 283% yoy. AI applications revenue reached Rmb2.5b in 2Q26, up 3% yoy. Total online marketing revenue dropped 19% yoy to Rmb13.1b, while revenue from AI-native marketing
services including agents and digital humans reached Rmb2.6b, remaining flat yoy vs 36% yoy in 1Q26.
• Solid progress in Apollo Go. Apollo Go continued to expand internationally in 2Q26, commencing open-road testing in London with Uber and Lyft, launching fully driverless commercial operations in Dubai, and obtaining Hong Kong’s first permits for fully driverless testing. Apollo Go also
conducted open-road testing in Switzerland with PostBus and signed an MoU to explore autonomous ride-hailing services in Kazakhstan. To date, Apollo Go's global footprint has reached 28 cities, and its fleets have accumulated over 350m autonomous kilometers, including over 240m fully driverless autonomous kilometers.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$101.10
HK$145.00
43.4%
HK$186.00
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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