Baidu: China's AI And Robotaxi Leader Is In The Discount Bin

seekingalpha08-15

Baidu has been punished far too harshly.Little to no value is being assigned to AI and robotaxis here.While waiting, investors get downside protection from a massive cash pile.V2images Baidu (NASDAQ:...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2459473635?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/458699011/image_458699011.jpg","is_english":true,"pubTime":"2024-08-15 22:01","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2459473635","market":"hk","top_or_hot":-1,"title":"Baidu: China's AI And Robotaxi Leader Is In The Discount Bin","media":"seekingalpha","content":"<div>\n<p>Baidu has been punished far too harshly.Little to no value is being assigned to AI and robotaxis here.While waiting, investors get downside protection from a massive cash pile.V2images Baidu (NASDAQ:...</p>\n\n<a href=\"https://seekingalpha.com/article/4714818-baidu-china-ai-robotaxi-leader-in-discount-bin\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Baidu: China's AI And Robotaxi Leader Is In The Discount Bin</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBaidu: China's AI And Robotaxi Leader Is In The Discount Bin\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-15 22:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4714818-baidu-china-ai-robotaxi-leader-in-discount-bin><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Baidu has been punished far too harshly.Little to no value is being assigned to AI and robotaxis here.While waiting, investors get downside protection from a massive cash pile.V2images Baidu (NASDAQ:...</p>\n\n<a href=\"https://seekingalpha.com/article/4714818-baidu-china-ai-robotaxi-leader-in-discount-bin\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B3S45H60.SGD","symbol_name":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","start_time":0,"source_url":"https://seekingalpha.com/article/4714818-baidu-china-ai-robotaxi-leader-in-discount-bin","article_id":"2459473635","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/458699011/image_458699011.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2459473635","pubTimestamp":1723730472,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"But AI is on the Upswing Slower growth in ads is being partially offset, though, by Baidu's AI capabilities . Not just in sea","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"89888":"百度集团-SWR","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","LU0417516738.SGD":"Allianz Hong Kong Equity AT Acc SGD","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","LU0823411888.USD":"法巴消费创新基金 Cap","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","LU1551013342.USD":"Allianz Income and Growth Cl AMg2 DIS USD","LU0348735423.USD":"ALLIANZ HONG KONG EQUITY \"A\" (USD) INC","LU0082616367.USD":"摩根大通美国科技A（dist）","GB00B4QBRK32.GBP":"FUNDSMITH EQUITY \"R\" (GBP) INC","BIDU":"百度","LU0640798160.USD":"EASTSPRING INVESTMENTS GLOBAL EMERGING MARKET DYNAMIC \"A\" (USD) ACC","LU0856984785.SGD":"HSBC GIF MANAGED SOLUTIONS ASIA FOCUSED GROWTH \"ACH\" (SGDHDG) ACC","SG9999014674.SGD":"Nikko AM All China Equity A SGD","TSLA":"特斯拉","LU1115378108.SGD":"Eastspring Investments - Global Emerging Markets Dynamic AS SGD","GB00B4LPDJ14.GBP":"FUNDSMITH EQUITY \"R\" (GBP) ACC","IE00BJLML261.HKD":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) ACC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","LU0163747925.USD":"EASTSPRING INVESTMENTS ASIAN EQUITY A ACC","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","LU0823414478.USD":"法巴经典能源转换基金","SG9999015978.USD":"利安颠覆性创新基金A","TCEHY":"腾讯控股ADR","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","BK4532":"文艺复兴科技持仓","IE00B775H168.HKD":"JANUS HENDERSON BALANCED \"A5M\" (HKD) INC","LU0823426480.USD":"法巴中国股票经典Dis","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4531":"中概回港概念","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","BK4534":"瑞士信贷持仓","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","LU0197773160.USD":"HSBC GIF ASIA PACIF EX JAPAN EQ HD \"AC\" ACC","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","09888":"百度集团-SW","LU0173614495.USD":"富达中国焦点A","KUASF":"KUAISHOU TECHNOLOGY","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0197773673.USD":"HSBC GIF ASIA PACIF EX JAPAN EQ HD \"AS\" (USD) INC","LU2476274308.USD":"ALLIANZ CHINA FUTURE TECHNOLOGIES \"AT\" (USD) ACC"},"translate_title":"百度：国内AI和Robotaxi龙头在打折箱","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"89888":0.6,"09888":1,"BIDU":1,"KUASF":1,"TSLA":0.7,"TCEHY":0.6},"content_text":"Baidu has been punished far too harshly.Little to no value is being assigned to AI and robotaxis here.While waiting, investors get downside protection from a massive cash pile.V2images Baidu (NASDAQ:BIDU) has long been a tale of two halves. On the one hand, you have a challenged search business likely headed for near-term disappointments in next week's earnings. But then there's the basket of high-growth options, starting with artificial intelligence (or 'AI'), where Baidu retains a sizeable lead over the competition (see Baidu: Buy The AI Story Without Paying For It). Similarly, in autonomous driving, Baidu is at the cutting edge in China. On both counts, the current P&L contribution is admittedly immaterial today, but the long-term growth opportunity, if Baidu gets either right, could be immense. The best part about Baidu's investment case, though, is that investors really don't have to underwrite very much success at all. Underpinning the value is Baidu's cash position, which, net of debt, equates to nearly 70% of its market capitalization. Ex-net cash, the stock is effectively priced below 3x next year's consensus earnings per share (or ~7x unadjusted) - too steep a discount, in my view, for a company still on track for bottom-line growth. Heading into next week's Q2 report, the bar is low enough that even incremental positives on capital allocation (bigger buybacks) or structural growth (AI monetization and robotaxi progress), along with silver linings in ads (better H2 2024), could re-rate the stock. Data by YCharts Advertising Growth Slows… Baidu management spends a lot of time talking up its AI and robotaxi initiatives these days, but the lion's share of its profits is still advertising-based. As the company is primarily exposed to offline verticals that track the broader economy, growth has understandably decelerated alongside China's nominal GDP growth (now tracking in the low-single-digits % for 2024). Adding to the macro headwinds is the risk that competition from Tencent's (OTCPK:TCEHY) WeChat ecosystem and short video platforms like Douyin and Kuaishou (OTCPK:KUASF) continue eating into Baidu's share of ad spending. Reuters Balanced against these headwinds is Baidu's efforts to enhance its search offering with generative AI (a la Microsoft's (MSFT) 'new Bing'). Yes, there will be some cannibalization in the near term, given genAI content isn't monetized the way conventional search is. But if/when monetization kicks in, ads growth could well return to a 'GDP plus' pace - a scenario the market doesn't appear to be contemplating at all. As for the macro, China's gradual fiscal/monetary easing means a recovery will take time. With benchmark yields down to record lows after big rate cuts in Q3, though, I wouldn't rule out green shoots in the back half of this year. Bloomberg …But AI is on the Upswing Slower growth in ads is being partially offset, though, by Baidu's AI capabilities (reportedly on par with OpenAI's GPT-4). Not just in search, where ~11% of results now incorporate genAI in some form (per Q1 2024 commentary), or on the consumer side via Ernie Bot (the Chinese large language model leader at >200m users), but on enterprise use cases, where the path to monetization is a lot clearer. Think automating parts of the customer service/call center flow or real-time content censorship for media platforms. NBR It remains early days, but if cloud AI, Baidu's current growth focus, does indeed yield cost savings with its early partners, the long-term growth runway could surprise massively to the upside. Unlike its Western peers, though, Baidu is also a lot more constrained due to chip sanctions, so updates on AI capital needs and GPU inventory will be worth looking out for with Q2 reporting next week. …and the Robotaxi Opportunity is at Hand Also embedded within Baidu is Apollo Go, China's autonomous vehicle leader. For a while now, this unit had been written off as an 'out-of-the-money' option; but with Beijing coming out with a supportive policy draft for robotaxi commercialization last month, the upside here can no longer be ignored. Though it's too early to size the robotaxi opportunity in China, what is clear is that Baidu has a big first-mover advantage, having accumulated over 6m rides (mainly in tier-1 Chinese cities). And on the development front, there are unique opportunities to extend its lead, including via a tie-up with Tesla (TSLA). While currently limited to Baidu Maps and 3D navigation, there's clear room for this win-win partnership to expand a lot further down the line. In the meantime, navigating the tricky balance between development and cost will be a key monitorable in Q2. Near term, management has already outlined a path to narrowing losses for Apollo Go, for instance, by tapping into efficiencies on both the operating (30% reduction) and service costs (80% reduction). Baidu The key, though, will be scale, as the operating leverage (i.e., spreading more revenue over a fixed cost base) inherent in the robotaxi model is potentially massive. In this regard, progress updates in Wuhan, the city where Baidu has seen the most traction (>800k rides in Q1 2024 alone), present an early litmus test. Not just on fleet expansion, but also on the path to profitability, with current guidance already calling for break even in the city by year-end. Baidu China's AI and Robotaxi Leader is in the Discount Bin Baidu's core ads business isn't in the greatest shape, but the stock seems overly penalized at this point. Keep in mind that this remains China's clear leader in AI and robotaxis - two exciting growth areas with a lot of runway. While waiting, investors also get protection from a net cash position that has blown up to ~70% of Baidu's market cap and an ongoing ~$5bn buyback program. So even if we do get more ad-related disappointments in Q2 next week, the bar is low enough that any signs of a second-half recovery or incremental progress on robotaxis or AI could re-rate the stock quite significantly.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2459473635"}