Morgan Stanley Cuts Baidu Target to $80, Downgrades Stock After 18.5% Ads Drop
Updated
Updated · CNBC · Aug 19
Morgan Stanley Cuts Baidu Target to $80, Downgrades Stock After 18.5% Ads Drop
3 articles · Updated · CNBC · Aug 19
Summary
Morgan Stanley downgraded Baidu to underweight from equal-weight and slashed its price target to $80 from $130, implying 12% downside from Tuesday's close.
An 18.5% year-over-year drop in core ads and limited second-half recovery drove the call, even as AI cloud infrastructure revenue is expected to accelerate in the third quarter.
Baidu's second-quarter miss reinforced that view: EPADS came in at 7.22 yuan versus 9.35 yuan expected, while revenue was 31.33 billion yuan against a 31.78 billion yuan consensus.
Higher spending on talent, Ernie model upgrades and computing expansion is expected to push core operating profit lower and likely to a third-quarter trough, with AI monetization still too early to lift results meaningfully.
The bearish call breaks with Wall Street consensus—27 of 32 analysts still rate Baidu buy or strong buy—despite the shares already falling about 30% this year.