To The Moon

🌟🌟🌟$Baidu(BIDU)$ 

is China's largest and most widely used search engine, much like Google in the US. Baidu is also one of the largest AI and Internet companies in the world.

The word Baidu means hundred times in Chinese.  Baidu was incorporated in 2000 by Robin Li and Eric Xi.

Baidu offers various services from a Chinese search engine as well as  mapping service called Baidu Maps.  Baidu offers 57 search and community services such as Baidu Baike (an online encyclopedia), Baidu Wangpan (a cloud storage service), and Baidu Tieba (a keyword based discussion forum).

Baidu has just reported its 3Q23 results on November 21 2023.  Revenue grew by 6% year on year to USD 34.45 billion Yuan (USD 4.72 billion) in 3Q23.  That was slightly higher than expectations of USD 34.33 billion Yuan. It comes after revenue in the previous quarter surged 15% from a year ago with online and non online marketing revenue growing by double digits.

Baidu reported net income of 7.27 billion Yuan for 3Q23, up 23%  from 5.89 billion Yuan in the previous quarter year. 

The adjusted profit was 20.4 yuan per American Depository Share (ADS) compared to 16.87 Yuan per share previous year.  This exceeded analysts 'estimate of 16. 55 Yuan per ADS. 

Baidu has launched Ernie 4.0, its most powerful foundation model in generative AI.  Baidu has harnessed the power of ERNIE and ERNIE Bot in their consumer and enterprise products.  ERNIE API is now open to cloud enterprises, empowering them to develop their own AI native applications and solutions.  Baidu 's AI centric business and product strategy should set the stage for sustained multi year revenue and profit expansion within ERNIE and ERNIE Bot ecosystem.

According to Baidu,  ERNIE 4.0's capabilities are on par with those of ChatGPT maker OpenAI' s GPT model.

When asked about the US chip restrictions to China, CEO Robin Li said that Baidu has a substantial reserve of AI Chips that can allow Baidu to keep improving ERNIE Bot for the next 2 years. 

Robin Li also said that Baidu has made changes to the ERNIE foundation model to make it more compatible with different kinds of AI chips.   In the long term, Baidu expects companies will focus on building applications based on ERNIE instead of building their own large models.

Baidu will continue prioritising investments in AI, especially in Generative AI and Foundation Models with unrelenting focus on efficiency and strategic resource allocation. 

The app traffic of Baidu has been growing steadily in the past 2 years.  In June 2023, Baidu recorded 677 million active users of its app.

Baidu reported that its Apollo Go robotaxi business operated 821,000 rides in 3Q23, up from 714,000 rides from previous quarter.  Fully autonomous taxis already operate on Wuhan accounting for more than 40% of orders in the region during 3Q23, up from 35% in the previous quarter.

Baidu also owns $iQiyi Inc.(IQ)$ 

which is the leading provider of online entertainment video services in China.  IQiyi is the Netflix of China.  IQiyi has just reported its 3Q23 earnings on November 21 2023.  Total revenue was RMB 8 billion (USD 1.1 billion) increasing 7% year over year.   Operating income was RMB 746.7 million (USD 102.4 million) and operating income margin was 9% compared to operating income of RMB 309.7 million and operating income margin of 4% in the previous year quarter.

According to Yu Gong, Founder and CEO of iQiyi, the company recorded strong results in both revenues and profits.    The average daily number of total subscribing members for 3Q 2023 was 107.5 million, compared to 101 million for the previous year quarter.  The monthly average revenue per member (ARM) was RMB 15.54 for 3Q 2023 compared to RMB 13.90 for the previous year quarter, increasing 12% year over year.

Baidu 's share price is up 8.55% in the past 5 days and up 27% in the past year.

Wall Street Analysts are bullish on Baidu with a Buy rating, Target price of USD 176.21, an upside potential of 46%.

Baidu has a wide moat as it is the number 1 search engine in China.  Baidu also ticks all the core fundamentals of a quality stock.  It is profitable, has a solid balance sheet and an excellent management team.  With its intense focus on Generative AI, Baidu has exponential growth ahead. 

I believe that Baidu is undervalued and has lots of upside potential ahead.  So this is a golden opportunity to invest in Baidu and hold for the long term as it represents the new frontier of AI in China. 

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