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Baidu’s foundational operating segment is its internet search engine and that’s unlikely to change.
In December, Baidu accounted for 66.52% of all search share in China, according to data from GlobalStats.
But there’s more to like about Baidu than just its massive moat in internet search. Specifically, the company’s burgeoning AI-driven segments offer outsized growth potential.
Apollo Go is the world’s top autonomous ride-hailing company by total rides since inception (4.1 million). Meanwhile, enterprise cloud spending is still in its early stages of expansion, which should fuel a revenue ramp for Baidu’s AI Cloud. AI has the potential to be a major cash-flow driver for Baidu, but it could require some patience as the technology matures.
The valuation also makes a lot of sense. Even accounting for the added regulatory risks that comes with investing in China stocks, Baidu shares can be purchased for less than 11 times forward-year earnings. That’s exceptionally inexpensive for a company that’s historically grown by a double-digit rate.
Source: Daily Trade Alert