DBS's report stated that due to the weak macro market and the upgrade of artificial intelligence search, it is expected that Baidu (09888.HK) will see a 1.5% decline in online marketing revenue for the 2024 fiscal year, followed by a 3% growth in the 2025 fiscal year. The AI cloud business is the mid-term driver, with expected revenue for this segment to have a compound annual growth rate of 13% from fiscal year 2023 to 2026.

DBS lowers Baidu's adjusted profit forecasts for the 2024 to 2026 fiscal years by 3%/8%/9% respectively, to reflect assumptions of declining advertising and iQIYI revenue. Bullish on the prospects of artificial intelligence and cloud businesses, maintaining a 'buy' rating with the target price revised down from 138 yuan to 102 yuan.