UOB Kay Hian forecasts a 2.9% year-on-year decline in BIDU-SW's total revenue for Q1 2026, estimating it will reach RMB31.5 billion, with AI-related businesses expected to contribute about 50% of this revenue. The firm believes that AI cloud infrastructure will be a key growth driver, compensating for ongoing weaknesses in traditional search advertising. However, due to the increasing share of lower-margin AI businesses, the broker has reduced its net profit forecasts for BIDU-SW for Q1 2026 and FY 2026 by 1% and 2%, respectively, and has lowered the target price from HKD175 to HKD170 while maintaining a Buy rating.
