To The Moon

Baidu's $Baidu(BIDU)$ stock price soared by more than 16% on the past two days, and investors in the secondary market said they were both surprised and panicked. I don't know whether to make a profit for those who have got on the bus ahead of schedule, and those who haven't got on the bus don't know whether to get on the bus in time. What I'm afraid of is a high-level quilt cover. After all, the current stock price has doubled from the October 2022 low.

The impact of the news is that on January 30, multi-channel information showed that Baidu was developing an AI dialogue service similar to Chat GPT. Reuters reported that Baidu plans to launch a standalone application of the product in March, and then gradually merge it into search engines.

Obviously, Chat GPT, as a catalyst, has ushered in a dense crowd of funds in the short term.

The question that everyone is most concerned about is whether the stock price rebound will continue.

Is it a flash in the pan or a valuation revaluation?

Investment has never been a simple linear deduction. First of all, without the impact of Chat GPT, is the Baidu value not worth an equivalent level of valuation repair?

You should know that since the bottom of October-November last year, with the release of third-quarter results, cost reduction and efficiency have become the theme of companies, as well as the gradual relaxation of masks, the support of national economic signals and the slowdown in interest rate hikes by the Federal Reserve, science and network stocks have more than doubled, such as Alibaba and Beijing. Donghe Kuaishou, while Pinduoduo benefited from its eye-catching performance in the third quarter, more than tripled.

In this way, under the general rise, Baidu has not been able to keep up with the rebound. You know, Baidu's non-GAAP net profit margin is also 23.4%, which is 24.3% for Pinduoduo and 16.3% for Alibaba. After careful investigation of the business, several companies are not bad. Although the growth rate is not as high as Pinduoduo, the valuation of Pinduoduoduo is also very high, with a market sales rate of 7.4 times, and Alibaba and Baidu are more than 2 times.

Therefore, even without the hype of AIGC-related concepts, Baidu is still worth a popular repair.

Secondly, what is Baidu's AI technology? Chat GPT detonates the AIGC application, how will Baidu occupy the position?

The investment is in the future of an enterprise's continuous operation. Artificial intelligence must be the future trend of the technology industry, just as trams must be the future trend of the automotive industry.

Baidu is one of the few artificial intelligence companies in the world to carry out full stack layout. The company has invested high research and development regardless of costs for many years. As of the second quarter of 22, core R&D expenses have accounted for more than 20% of Baidu's core revenue for seven consecutive quarters.

According to Li Yanhong's speech at the Baidu Create AI Developer Conference, the AI part can be divided into four layers: chip layer, framework layer, model layer and application layer. From high-end chip Kunlun to the paddle deep learning framework, to the literary pre-training model, there are key self-developed technologies at each level, and there is a lot of feedback between each layer. Through continuous feedback, end-to-end optimization is achieved. The lower the technical architecture, the more common it is, and the more it is, the more specialized it will be. More universal means constantly lowering the threshold for the use of technology in the industry. More specialized is in-depth.

Regarding the application scenarios of AIGC, Baidu has also done a lot, as shown in the figure below, which is sorted out for Soochow Securities:

Combined with Baidu's news about the Chinese version of Chat GPT, this is a logical thing for Baidu. In the past of the epidemic, the economic recovery is imminent. Whether it is the support of national policies or the high demand of consumers, with Chat GPT as the introduction, Baidu ushered in a start to boost confidence and hope. The rise in stock prices in the past few days shows that the market believes that China ChatGPT will bring great value to Baidu. It is not only a catalyst, but also needs to be closely followed by us and not to be thrown out of the new era.

Whether Baidu will continue to rise in the future depends on the fourth-quarter financial report in the short term. Whether the results of reducing costs and increasing efficiency will continue; in the medium and long term, it depends on the development of AI business and the outlook of 23 years.

Whether to buy or not depends on you. $ Baidu. US $Baidu Group-SW.HK

Statement: This article is only for learning and communication, and does not constitute investment advice.

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