Baidu (BIDU); HK 9888

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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

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BIDU-SW Crashes; Ernie Foundation Model Reportedly Used by CN Military Research

Baidu US shares (BIDU.US) crashed 7% on Friday (12 Jan), and H-shares BIDU-SW (09888.HK)
also opened crumpling.

According to South China Morning Post, a mainland military research lab used Baidu's Ernie foundation model and iFLYTEK's Spark foundation model, to make military AI more humanised.

Baidu responded that its Ernie foundation model is publicly online and the company has no cooperation or affiliation with the military research lab, nor any knowledge of the military research project.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

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Baidu slides 10% after report links Ernie AI to Chinese military

The South China Morning Post (SCMP) reported that a research laboratory associated with the People’s Liberation Army (PLA) Strategic Support Force had tested an experimental AI system on Baidu’s Ernie and peer IFlyTek’s Spark large language models.

Baidu told the SCMP that the company had no affiliation with the laboratory, and that any version of the Ernie bot used in the testing was likely a publicly available version.

But the report ramped up concerns that any potential affiliation with the PLA could attract sanctions from the U.S., especially as both countries explore military applications of AI.

Baidu’s Ernie bot was the company’s answer to OpenAI’s ChatGPT, coming just a few months after the latter, amid a global push into large language models.

Baidu had already begun monetizing the model by late-2023, logging stronger sales in the third quarter on revenue from its AI offerings.

Source: investing.com

https://finance.yahoo.com/news/baidu-sl ... 02686.html

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Baidu sinks most since 2022 despite denying links to PLA AI

By Zheping Huang & Jeanny Yu

Chinese military use of Baidu’s Ernie large language model for an internal AI project, according to a South China Morning Post report, could raise tensions with the US and raises the question of whether this might attract potential US sanctions.

Baidu’s Ernie Bot amassed 100 million users months after its public rollout, and the company claims its self-developed model has matched GPT-4 in terms of general capabilities.

Beyond the report, investors are worried about Baidu’s prospects during a Chinese economic downturn — especially with Ernie still some way off from yielding enough revenue to offset a fundamental decline in online advertising.

“People are worried about sanctions on Baidu obviously after the news report about military ties. They fear that the US government may announce measures to target Baidu.

“The overall sentiment over China is weak and US-China relationship is still intense, so investors sell first no matter if the news is true or not.”

Source: Bloomberg

https://theedgemalaysia.com/node/697341

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Samsung to integrate Baidu’s AI model into new Galaxy S24 handsets, as mainland Chinese rivals push new smartphones with similar tech

Samsung’s Galaxy S24 series smartphones will deploy Baidu’s Ernie AI model to perform the handsets’ new ‘Circle of Search’ feature

Ernie will also help users translate and summarise texts, as well as transcribe speech in multiple languages via the Note Assistant function

by Iris Deng

Source: SCMP

https://www.scmp.com/tech/big-tech/arti ... s-push-new

[winston]

Baidu Inc (9888 HK)
4Q23 Results Preview: AIGC Monetisation To Foster Ads And AI Cloud

4Q23 results will be released in mid-Mar 24.

We forecast 4Q23 revenue to grow 7% yoy, mainly anchored by incremental contributions from ad and AI Cloud revenue growth, empowered by AI application.

Management expects AI-related ad revenue in 4Q23 to hit hundreds of millions in renminbi, with a low to mid single-digit revenue contribution to AI Cloud.

Baidu also expects quarterly revenue from generative AI to surpass Rmb1b in 2024.

Maintain BUY with a lower target price of HK$135.00 (US$138.00).

Source: UOBKH

https://research.uobkayhian.com/content ... 3715915173

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Baidu’s Profit Halves After AI Spending Erodes Bottom Line

by Zheping Huang

The company reported a December-quarter net income of 2.6 billion yuan ($361 million) that missed projections, though much of that stemmed from a loss from equity accounting for preferred shares.

It overshadowed a 6% rise in revenue after Baidu’s ChatGPT-style service began to augment advertising sales.

Attracted more than 100 million users to its ChatGPT-style service — now including a premium tier that charges a monthly subscription.

Source: Reuters

https://finance.yahoo.com/news/baidu-re ... 26003.html

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Baidu’s revenue rose 6 per cent after its ChatGPT-style service began to augment advertising sales, helping the Chinese AI leader weather a severe economic downturn.

The company reported sales of nearly 35 billion yuan (S$6.5 billion) for the three months ended December, broadly in line with analysts’ projections.

Net income slid 48 per cent to 2.6 billion yuan.

To rekindle growth, Baidu has joined Silicon Valley peers from Microsoft to Google, in seeking ways to monetise generative AI.

The Chinese company has attracted more than 100 million users to its ChatGPT-style service – now including a premium tier that charges a monthly subscription – giving it a headstart against peers like Tencent Holdings and ByteDance.

But revenue generated by the AI model, known as Ernie, is a drop in the bucket for Baidu, which still relies mainly on search ads.

Source: Phillips

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Baidu Inc (9888 HK)
4Q23: Results In Line; All Eyes On AI-powered Ads And Ernie Bot In 2024

Baidu’s 4Q23 results were within expectations. Revenue grew 6% yoy to Rmb35b, in line with consensus estimates.

Gross margin expanded 1.4ppt yoy to 50.2%, within consensus expectations.

Non-GAAP operating profit was Rmb7.1b, up 9% yoy, while non-GAAP operating profit margin came in at 20%.

Non-GAAP net profit improved by 44% yoy to Rmb7.8b on one-off gains, exceeding consensus estimates by 22%.

Maintain BUY with a lower target price of HK$128.00 (US$142.00).

Source: UOBKH

https://research.uobkayhian.com/content ... f6645d29df

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Broker│Opinion

Jefferies│Maintains revenue growth forecast for this year

CMBI│Focuses on generative AI business

Citi│4Q23 earnings exceeded expectations

UBS│Core revenue and earnings growth in 4Q23 in line

Goldman Sachs│4Q23 sales in line, AI sales revenues propel earnings to beat

BOCI│AI transformation driving growth

CLSA│Generative AI growing steadily

HSBC Global Research│Generative AI monetisation advances as expected

BofA Securities│Weak macro-economy poses risk

CICC│Full-year margins expected to be relatively healthy

Macquarie│AI business progressing as expected

Nomura│4Q23 net profit beats expectations, but 1Q24 outlook cautious

Morgan Stanley│4Q23 operating revenue and core operating revenue in line, while earnings and
core earnings beat

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN