0821 GMT - The outlook for Baidu's AI cloud business is favorable, but its growth rate is likely to normalize in 2Q, according to Nomura analysts in a research note. The business unit's revenue grew 42% on year in 1Q, thanks to strong demand from enterprises to deploying large language models, as well as contribution from project-based contracts, the analysts note. Still, the analysts expect Baidu's cloud revenue growth to slow down in 2Q, growing 26%, assuming no additional contribution from project-based contracts. They also note that the strength in Baidu's cloud business is not enough to offset the weakness and structural challenges faced by its ad business, which generates over 80% of its profits, based on their estimates. Nomura keeps a neutral rating, and cut its target price of its ADRs from US$98.00 from US$95.00. Its ADRs last traded at US$84.07. (tracy.qu@wsj.com)
(END) Dow Jones Newswires
May 23, 2025 04:21 ET (08:21 GMT)
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