Goldman Sachs: Maintaining Baidu Group-SW (09888) “Buy” Rating Target Price of HK$99

The Zhitong Finance App learned that Goldman Sachs released a research report stating that it maintains the Baidu Group-SW (09888) “buy” rating, with a target price of HK$99. Baidu announced that the DeepSeek-R1/v3 model can be used on Baidu Qianfan Cloud Platform at a more competitive price than its peers, and can be used free of charge until February 19, 2025. The cloud platform also provides a range of other third-party LLMs, including Llama, ChatGLM, etc., as well as its proprietary Ernie 4.0 LLMS.

The bank expects Baidu Cloud revenue to accelerate and profit from profitable growth in 2025. It says that with the reduction of the DeepSEEK-R1/v3 model, inference costs will be significantly reduced, while achieving top-level mathematics/coding/natural language reasoning performance, etc., the bank believes it will help popularize and adopt artificial intelligence (AI). As a result, hyperscale enterprises will benefit from the increasing adoption rate of AI, and higher total inference revenue can still generate medium and hyperscale enterprises. The bank expects that Baidu will become one of the main beneficiaries with its highly competitive pricing.

Regarding DeepSeek (Deep Search), Goldman Sachs said that Baidu provides competitive pricing because it is trying to integrate with its cloud platform and optimize the model, and the service can still be profitable at discounted prices. According to the company. As of the third quarter of 2024, AI-related businesses already accounted for 11% of cloud revenue, compared to only 5% at the end of 2023.