Baidu (BIDU) is a big Chinese technology company listed in New York and in Hong Kong. It is often compared to Google, the giant American company that runs the biggest search engine in the world.
Baidu makes most of its money from advertising as Google does. In addition to search, the company is a big player in cloud computing, video streaming, and artificial intelligence.
The company has also introduced new solutions in its portfolio. For example, it has launched Apollo Go, its robotaxi solution that is already used in tier-1 cities like Beijing, Shanghai, and Guangzhou.
Baidu has a dominant market share in China, where it is used by over a billion people. The challenge, however, is unlike Google, it is only used in China. It lacks the international presence that will propel its business higher over time.
Baidu’s stock has not done well over time as its growth trajectory has slowed. It has crashed by over 76% from its highest level in 2021 and is hovering near its lowest level on record.
The stock was trading at $84.8 in New York, while the HypeIndex metric rose to 57%.
Positive hype
Baidu’s positive hype has risen as some investors believe that it is a good and cheap contrarian company. It has a price-to-earnings ratio of 8.35, while a company like Google has 25.
Baidu was recently upgraded by analysts at CMB, who pushed their target to $153.60, almost double where it is today. The analysts noted its advancement in the artificial intelligence industry.
It has made a lot of progress on automation, especially on robotaxis, a move that could help it expand its business in other countries.
The company has a large market share in China, the second-biggest country in the world. It faces limited competition there, meaning that it will continue doing well for a long time.
Analysts believe that Baidu’s business will continue doing well in the coming years as its revenue is expected to grow from RMB 133 billion in 2024 to RMB 139 billion next year.
Baidu’s profits are expected to continue growing, moving from 133 per share to 139 per share in 2026.
The average Baidu stock target is $812, much higher than the current $84. This view is mostly because analysts believe that the company is a bit cheap.
Baidu has a strong balance sheet with over $18 billion in cash and short-term investments and little debt.
Negative hype
The company is struggling to grow its business internationally, where Google has a dominant market share.
Baidu’s results showed that its advertising business was slowing as many companies in China go through a slowdown.
Donald Trump won the election and appointed Marco Rubio to be the next Secretary of State. Rubio is a China hawk, who may advance policies that hurt companies from the country.
There are chances that Baidu will struggle as the US limits exports of critical products like semiconductors to the country.
Its cloud computing business is struggling to find customers outside China and facing substantial competition.
Baidu stock price analysis
Baidu stock price has been in a freefall in the past few years as concerns about its slowdown continued. As a result, it has remained below the 50-day and 100-day Exponential Moving Averages (EMA), meaning that bears are in control.
On the positive side, a contrarian case can be made since Baidu has formed a double-bottom pattern at $80. In most periods, this is one of the most popular bullish reversal signs in the market. Therefore, the stock will likely bounce back and possibly move to $100 in the next few months.
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