Citi puts Baidu on 30-day catalyst watch as AI infrastructure expands
Citi maintained its Buy rating and US$166 price target, citing growth in Baidu’s AI businesses and possible Stock Connect eligibility.
Citi has placed Baidu on a 30-day upside catalyst watch while reiterating its Buy rating and US$166 price target, according to a note from analyst Alicia Yap on 2 September.
The bank’s view followed its 2026 China TMT Corporate Day, which highlighted Baidu’s AI-powered business strategy, GPU cloud growth, AI infrastructure investment and the development roadmap for its Ernie model.
Baidu’s core AI-powered business generated RMB12.5 billion in the second quarter, up 25 per cent from a year earlier, Citi reported. AI cloud infrastructure revenue rose 50 per cent to RMB7.3 billion, while GPU Cloud revenue increased 283 per cent amid higher demand for public-cloud AI computing.
Citi also identified potential eligibility for Stock Connect as a possible near-term catalyst for fund flows. The material does not establish whether Baidu will qualify or when any decision might be made.
The AI expansion is being accompanied by pressure elsewhere in the business. Baidu’s second-quarter revenue fell 4 per cent to RMB31.3 billion, while online marketing revenue declined 19 per cent. Spending on computing infrastructure, AI models and talent is also weighing on short-term margins.
Institutional ownership was broadly stable, with 49 hedge funds holding Baidu at the end of the second quarter, compared with 50 previously. Appaloosa Management increased its position by 88 per cent to 1.295 million shares, according to the report.
