The report from Bank of China International indicates that Baidu (BIDU.US) saw its core revenue remain flat year-on-year in the third quarter, resulting in a 19% year-on-year decline in non-GAAP net income to 5.9 billion yuan, which was worse than expected. The bank maintains a cautious outlook on the company's advertising growth for the fourth quarter, but is optimistic about long-term profit prospects supported by generative ai, reiterating the rating as "buy" and lowering the US stock target price from $135.79 to $128.01.

The bank also slightly lowered its forecast for the company's non-GAAP net profit this year by 0.5%, while raising the forecast for 2025 to 2026 by 4.3% to 5.1%, to reflect recent gross margin pressure, but remains optimistic about future profit prospects after increasing investments in ai.

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