CLSA: Maintains Baidu "Outperform" rating, target price $176

According to Golden Ten Data on May 11, Lyon issued a report predicting that the core business revenue of a certain exchange will decline by 2.5% year-on-year in the first quarter to 24.8 billion RMB, dragged down by over 20% drop in marketing revenue. However, revenue from artificial intelligence-related business is expected to increase by 39% to 12.4 billion RMB, accounting for 50% of BGB revenue. Among them, AI cloud infrastructure has become a new growth engine, benefiting from a surge in inference workloads, with revenue growing over 40% year-on-year. Management expects the total revenue of BGB in the second quarter to grow by 1.8% year-on-year, with profit margins continuing to improve quarter-on-quarter. The exchange's Kunlun chip spin-off plan is progressing smoothly, and the company also plans to enhance shareholder returns through share buybacks and dividends. Lyon expects the exchange's BGB marketing revenue to fall by 21% year-on-year in the first quarter of this year, a wider decline compared to the 16% in the fourth quarter of 2025. This is mainly due to weaker seasonal performance caused by a later Lunar New Year this year, as well as increasingly fierce competition in the AI advertising sector. However, AI-native marketing business performed impressively, with revenue expected to surge by 65% year-on-year to 2.8 billion RMB, accounting for 22% of BGB’s total marketing revenue. Lyon maintains its “outperform the market” rating for the exchange, with a target price of $176.