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Fitch Downgrades Baidu to 'A-' From 'A', Outlook Stable

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Fitch Ratings downgraded Baidu's (HKG:9888) long-term issuer default rating and ratings on its outstanding bonds to 'A-' from 'A', according to a Thursday ratings commentary.

The outlook remains stable, with Fitch citing weaker EBITDA generation amid a structural decline in Baidu's search advertising business.

Fitch expects EBITDA to recover to 24 billion yuan to 25 billion yuan in 2026-2027 from 22 billion yuan in 2025, supported by growth in AI-related businesses, particularly AI cloud infrastructure.

Fitch said competition from AI chatbots, short-video, and social-media platforms is putting further pressure on Baidu's search monetization.

AI-generated summaries in search results could also reduce click-through rates and weigh on traditional advertising revenue.

Fitch expects the company to maintain a net cash position, with operating cash flow funding capital spending and dividends.

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