Baidu Stock offers exposure to generative AI technology and self-driving vehicles at a low multiple
Baidu (NASDAQ:BIDU), a Chinese tech company that competes with Google and Alibaba has struggled over the past few months. Its share price is down by more than 21% on a year-over-year basis.
The stock is arguably very affordable because of this, and the company’s low valuation. The stock offers exposure to innovative and booming technologies such as AI and self-driving cars.
Baidu Wenku, a content creation app, and Baidu AI Image Assistant, a Baidu app that offers gen-AI features, both together with each other. Baidu Wenku boasts that it has over 100 multimodal AI functions, which have been used by 140 million users more than 1.5 billion time.
Baidu’s gen AI crown jewel is Ernie Bot. Ernie Bot, which is similar to OpenAI’s ChatGPT app, is marketed as “a 24-7 online personal intelligent assistant that provides one-on-one support and meets diverse needs”.
Many Americans are probably unaware of how popular Ernie Bot in China is. Reuters reported that Ernie Bot has “reached 300 million users since it was launched,” and Baidu claimed its Ernie 4 version “rivals OpenAI’s GPT-4” in capabilities.
Tesla-Baidu robotaxi delayed, but not shelved
Tesla-Baidu robotaxi delayed, but not shelved
In a July note, Li Muhua, an analyst at Guotai Junan International, wrote: “Autonomous driving is going to become a major trade in the next three months. This will be aided by Tesla launching its robotaxi in one month.” Muhua was probably a bit premature in his predictions.
In June, Beijing, China regulators gave Tesla NASDAQ:TSLA the go-ahead to introduce its Full Self-Driving system (FSD). Around the same period, Tesla and Baidu announced a collaboration in order to develop the mapping technology and navigation needed to power Tesla’s FSD.
Bloomberg reported that Beijing regulators issued legislative draft guidelines allowing “robotaxis to be used in ride-hailing fleets and car rental fleets”. For a short time, it seemed that Baidu was ready to launch its grand foray in China’s nascent roboticaxi market.
Muhua’s projections of “the next three months” did not quite pan out. Sources expect Tesla to delay the robotaxi rollout until at least October. Guggenheim analyst Ron Jewsikow believes that a full-scale Tesla robotic vehicle launch will not happen until 2030.
The final results of the Tesla-Baidu Robotaxi will be delayed, but not completely shelved. Baidu does not rely solely on Tesla to generate robotaxi revenue. Baidu is currently testing its own Apollo Go robotic taxis in China.
Baidu expects Apollo Go will turn a profit in 2025. Muhua reported that Apollo Go should “break even” in Wuhan this year. It’s possible that Baidu’s roboticaxi segment, with or without Tesla’s involvement, could become a significant income source in the near future.
Grab it while it is cheap
Grab it while it is cheap
Baidu stock, for North American investors is a hidden gem of gen-AI that provides portfolio exposure to the emerging industry of self-driving vehicles. Baidu, unlike some U.S. tech darlings is not overvalued. Baidu’s GAAP measured trailing 12-month P/E (price-to-earnings) ratio is 13,44, compared to the sector median of 18,64.
P/E ratios don’t have to be the end-all for value-conscious investors, but they are a good starting point. Baidu is pursuing the latest and greatest in gen AI and robotaxi technology as it expands beyond its core business of search engine. Consider a value-packed investment with Baidu’s stock.
This site is intended for entertainment only and does NOT offer financial advice.
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