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2、s does and seeks to do business with issuers covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment d

3、ecision.Refer to important disclosures on page 7 to 10.Analyst Certification on page 4.Price Objective Basis/Risk on page 4.12852273 B Preview:more ad pressure,cloud on track,Robotaxi going overseas Maintain Rating:BUY|PO:100.00 USD|Price:86.32 USD Weaker ad,due to acceleration of AI search penetrat

4、ion We lower Baidu Cores 2Q outlook to a 2%total revenue decline YoY(vs.-1%previously)and RMB4b(vs.RMB4.9b previously)adjusted OP.We maintain 2Q cloud revenue outlook,as we expect customer demand to remain solid.We expect the step-up pace of AI penetration%to go from 13ppt add between Feb-April 2025

5、,to high-teens ppt add between April-Jun 2025,c20s ppt between Jun-Sept 2025.At such pace,we expect AI penetration%to reach 70-80%exiting 3Q25 and then become more stable in 4Q25.Accordingly,we expect Baidus ad decline to accelerate till 3Q and narrow in 4Q.Due to the cut in the high-margin ad reven

6、ue,our profit est.is also lowered.We lower Baidus total profit by 14%for 2025E and largely maintain 26-27E profit outlook.Maintain PO of USD100.We maintain Buy rating on undemanding valuation.Baidu is trading at just 9x adj.P/E and its net cash(current+non-current)is c70%of mkt cap.We expect stock p