Morgan Stanley downgraded Baidu from equal-weight to underweight and cut its price target to $80 from $130, implying 12% downside from Tuesday’s close. The company reported weaker-than-expected quarterly results: diluted earnings per share of 7.22 yuan ($1.07) versus the 9.35 yuan ($1.38) consensus, and revenue of 31.33 billion yuan ($4.64 billion) below the 31.78 billion yuan ($4.71 billion) estimate. Core advertising revenue fell 18.5% year over year, and heavy AI investments, particularly in the Ernie model, continue to drag on profitability. The stock dropped more than 12% on Tuesday and is down roughly 30% year to date, while Morgan Stanley stands out against the bullish Wall Street consensus.
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