Morningstar downgraded Baidu’s economic moat rating to None from Wide.
The firm reduced its fair value estimate for the stock by 12% to $128 per share. Analysts forecast a decline in non-AI business revenue in the coming years due to weakness in the core search segment.
Baidu is pivoting toward AI-powered ventures to offset the contraction of its legacy advertising business. The company plans to complete an initial public offering for Kunlunxin, its AI chip unit, in the first half of 2026. This strategy aims to highlight the valuation of Baidu's AI hardware operations during its structural transition.