Golden Axle Financial News | Tianfeng Securities issued a research report, Baidu Group (09888) Q3 total revenue of 33.6 billion yuan, -3% year-on-year: Non-GAAP net income of 5.9 billion yuan, -19% year-on-year; Q3 Baidu core revenue was 26.5 billion yuan; among them, online marketing revenue was 18.8 billion yuan, -4% year-on-year: mainly due to the severe macroeconomic situation, consumer confidence and spending remain low. The bank expects online marketing revenue to maintain basic stability in the next few quarters.

The bank pointed out that the company's Q3 AI Cloud revenue reached 4.9 billion yuan, +11% year-on-year. Growth is mainly driven by Generative AI (gen-AI) and basic model, with AI revenue accounting for 11% of total AI Cloud revenue; iqiyi revenue was 7.2 billion yuan, -10% year-on-year. The bank believes that the company's strong technological advantage in AI infrastructure will continue to drive AI Cloud revenue growth, with the ongoing expansion of ERNIE adoption, continued significant progress in basic model field, and expected leadership in the AI Cloud sector. The bank believes that the company's continued investment in AI will further expand Baidu's business capabilities.

The bank pointed out that according to the company's annual report, the self-driving service provided by the company, Luobu Kuai Pao, supplied approximately 0.988 million self-driving orders in Q3 24, +20% year-on-year. As of October 28, 2024, Luobu Kuai Pao has provided the public with over 8 million self-driving travel services. Based on completing 8 million travel services, the sixth generation self-driving car Apollo RT6 has highly competitive mass production costs, priced below 0.03 million dollars, and the company is steadily advancing in the development of self-driving cars.

The bank believes that the company's online marketing business is in a transitional period, combined with the current advertising industry situation, the company will continue to promote AI transformation, continuous investment in AI smart cloud business and the ongoing development of self-driving cars. The bank has adjusted the FY2024-2026 revenue forecast from 135/148.9/165.6 billion yuan to 133.8/147.6/164.1 billion yuan, and the Non-GAAP operating profit from 280/311/345 billion yuan to 27.4/30.8/34.2 billion yuan. Based on SOTP valuation, Baidu is given a target price of 137 Hong Kong dollars for its 2024 advertising, cloud business, and iqiyi non-advertising revenue, maintaining a 'buy' rating.