2. Baidu, Inc. (NASDAQ:BIDU)
Hedge Funds Holding Stakes: 42
Stock Upside Potential: 68.22%
Baidu, Inc. (NASDAQ:BIDU) is a Chinese tech giant that provides internet search services. The company offers access to Internet search services and other services in China. It generates most of its revenues from advertising and operating the biggest search engine in China. In addition, Baidu, Inc. (NASDAQ:BIDU) offers online marketing services that include pay-for-performance and auction-based services.
In the first quarter of 2024, Baidu, Inc. (NASDAQ:BIDU) announced an earnings of 31.513 billion Yuan (approximately $4.37 billion), a 1% increase from the previous year. Meanwhile, its adjusted net income rose to 7.01 billion Yuan ($971 billion), showing a growth of about 22% from the previous year.
This expansion was mainly attributed to the company’s digital marketing division, which sells advertising space. The demand for search advertising and digital marketing services in China saw a modest increase as more businesses began to focus their marketing efforts online following China’s economic revival.
In China, Baidu, Inc. (NASDAQ:BIDU) is often seen as a leader in artificial intelligence, boasting a search engine and autonomous taxi division named Apollo Go, which affirms why it is one of the best Chinese stocks to buy.
In the first quarter, earnings from sources other than marketing increased to 6.8 billion Yuan ($935 million), marking a 6% growth compared to the same period the previous year, with the bulk of this increase attributed to its AI Cloud division.
Although the cloud division might face challenges as companies reduce their IT budgets due to an uncertain economic climate, our attention will be primarily on the success of the AI division.
Baidu, Inc. (NASDAQ:BIDU) is currently rated as a Buy, with analysts maintaining an average price target of $141.29, implying a 68.22% upside potential from current levels. Likewise, 42 out of 920 hedge funds tracked by Insider Monkey held stakes in the companies as of the end of the second quarter.
Here is what Ariel Global Fund said about Baidu, Inc. (NASDAQ:BIDU) in its first quarter 2024 investor letter:
“Alternatively, several positions weighed on performance. China’s internet search and online community leader, Baidu, Inc. traded lower alongside Chinese equities as intensifying problems in China weighed on investor sentiment during the period. The company continues to invest heavily in Artificial Intelligence (AI) and recently launched its generative AI, Ernie Bot, aimed at rivaling Open AI’s ChatGPT. While monetization of the new technology is largely dependent on regulatory review, we think Baidu should continue to experience margin improvement with the ongoing implementation of efficiency and profitability initiatives. While some investors remain on the sidelines due to uncertainty surrounding China’s economic growth, government regulations, and the political rhetoric towards Taiwan, we remain enthusiastic about Baidu’s longer-term opportunity for revenue growth and margin expansion across internet search, cloud, autonomous driving, artificial intelligence and online video.”
