Both sentences are grammatically correct, but they convey slightly different meanings depending on the context.
"I will bake a cake tomorrow" indicates a future action. It implies that at some point in the future (tomorrow), you have the intention or plan to bake a cake.
"I'm baking a cake tomorrow" suggests that you have already made the decision or arrangement to bake a cake tomorrow. The use of the present continuous tense "I'm baking" indicates a planned activity or event that has been scheduled.
The choice between the two sentences depends on the context and the specific meaning you want to convey.