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Artificial intelligence (AI) is advancing at breakneck speed, reshaping industries and fueling a global tech race. With governments backing AI innovation and companies pouring billions into research, China has become a serious contender in this revolution. One of its most recent breakthroughs was DeepSeek, an AI model that triggered a selloff in U.S. tech stocks.
Beijing-based Baidu (BIDU) has long been a dominant force in China’s tech ecosystem and is set to make a major move on March 16 with the launch of its upgraded ERNIE AI bot. Promising enhanced reasoning and multimodal capabilities, this AI upgrade is Baidu’s bid to sharpen its competitive edge in an increasingly crowded space.
To that end, let’s take a closer look at this tech stock and what’s next for Baidu.
About Baidu Stock
Search giant Baidu (BIDU) has evolved into an AI-driven powerhouse, dominating China’s search advertising market while expanding into cloud computing, autonomous driving, and entertainment.
BIDU stock has declined 6.5% over the past 52 weeks, currently sitting 21% below its 52-week high. Things appear to be turning around in the new year, with shares climbing 9% on a YTD basis.
From a valuation standpoint, BIDU stock is priced at 11.47 times forward earnings and 1.62 times sales, lower than not only its sector peers, but also its historical averages.
Baidu Delivers Mixed Q4 Results
On Feb. 18, Baidu unveiled its Q4 earnings. Revenue landed at $4.7 billion, down 2% year-over-year but surpassing expectations. The standout was its Q4 AI cloud growth, which accelerated to 26%. Online marketing revenue dropped 7% to $2.5 billion, leaving core business revenue up just 1% at $3.8 billion.
Despite a 12% decline in adjusted earnings per ADS to $2.63, Baidu comfortably beat Wall Street projections.
Baidu’s AI ambitions extend beyond search. ERNIE Bot handled 1.65 billion API calls in December, with external API usage soaring 178% sequentially. Its Apollo Go ride-hailing service delivered 1.1 million rides, up 36%.
Moreover, Baidu is racing to cement its AI dominance, fast-tracking the launch of ERNIE 4.5 by mid-March. The move underscores its urgency in China’s booming AI space, especially after DeepSeek R1’s rapid rise. ERNIE 4.5 promises sharper reasoning and multimodal upgrades, with a free, open-source rollout set for June 30.
The company’s AI push could be a game-changer – or a high-stakes gamble in an increasingly competitive landscape. As businesses unlock new ways to leverage ERNIE and Baidu’s AI Cloud, Baidu management sees expanding possibilities.
Analysts tracking Baidu anticipate its EPS dipping 13% to $7.67 in fiscal 2025 before rebounding by 19% to $9.12 in fiscal 2026.
What Do Analysts Expect for Baidu Stock?
Last month, Wall Street took notice, boosting targets on the Chinese internet giant and AI trailblazer, signaling renewed confidence in its growth trajectory.
On Feb. 19, Bernstein raised its price target to $108 from $87, keeping a “Market Perform” rating.
Meanwhile, Benchmark’s Fawne Jiang remains upbeat, reaffirming a “Buy” with a $130 target. Despite market jitters, Jiang sees Baidu thriving as China’s GenAI boom unfolds, fueled by DeepSeek’s breakthroughs.
Mizuho lifted the target to $105, betting on AI-fueled growth. With ERNIE 4.5 going open-source, mass adoption could surge, mirroring DeepSeek’s success. Despite macroeconomic hurdles, AI-driven cloud gains and search monetization keep Baidu’s valuation compelling.
Overall, BIDU has a “Moderate Buy” consensus rating. Out of the 17 analysts in coverage, nine recommend a “Strong Buy,” while eight stay cautious with a “Hold.” BIDU’s mean price target of $113.35 implies the stock has upside potential of 24% from the current price levels. The street-high of $153 suggests that the Chinese tech stock could rally as much as 66%.
