Baidu Set to Accelerate AI Innovation

Lilu Anderson
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Baidu’s Focus on Core Ads Business Drives Market Share Growth

In a note released on Thursday, Macquarie Equity Research initiated coverage of Baidu with an Outperform rating and a target price of US$150 per share. Analysts highlighted Baidu’s greater focus on its core ads business as a key driver for steady market share growth. Despite being a highly cyclical sector, advertising channels are seeing divergent performance as merchants strive for better return on investment with superior conversion. Baidu’s emphasis on conversion-oriented search ad demand is expected to remain stable as advertisers aim to maximize advertising efficiency.

Cyclical Recovery in Ads Budget to Benefit Baidu, Says Macquarie

Macquarie believes that Baidu has room to benefit from a cyclical recovery in advertising budgets. The firm expects the digital ads market to grow moderately at 10% year-on-year, with ad budgets allocated to search-related advertising remaining relatively stable. This translates into an estimated 6% year-on-year core ad growth for Baidu in 2024. Baidu’s focus on its core ads business positions the company well to capitalize on the expected recovery in the advertising sector.

Conversion-Oriented Search Ad Demand Expected to Remain Steady

Macquarie Equity Research anticipates that conversion-oriented search ad demand will remain steady. Advertisers continue to strive for optimal advertising efficiency and are increasingly looking for channels that offer superior conversion rates. Baidu’s strong presence in the search advertising market, along with its focus on conversion-oriented ads, is expected to help the company maintain steady demand. With advertisers prioritizing ROI, Baidu’s ability to deliver efficient and effective advertising solutions places it in a favorable position.

Baidu Positioned to Lead in China’s AI Cloud Market

Macquarie Equity Research recognizes Baidu’s significant potential as an active contributor in the evolution of artificial intelligence. Baidu has been allocating above-average resources to build a comprehensive AI ecosystem that covers both enterprise and consumer scenarios. While revenue contribution from its AI initiatives remains small at this stage, Macquarie expects Baidu to maintain its leading position in China’s AI Cloud market. This is attributed to Baidu’s strong AI capabilities and improving market recognition.

Baidu’s Strong AI Capabilities Drive Revenue Growth and Market Recognition

The research firm acknowledges Baidu’s strong AI capabilities and views it as a catalyst for revenue growth and market recognition. Baidu’s commitment to developing a full-stack AI technology positions it well for future growth and market dominance. While its revenue from AI initiatives is currently minimal, the potential for AI-driven solutions in various sectors is immense. Baidu’s expertise and dedication to AI development enable it to create innovative solutions that address market needs, solidifying its position as a leading player in the AI landscape.

In conclusion, Macquarie Equity Research rates Baidu as Outperform, citing the company’s focus on its core ads business, potential for a cyclical recovery in advertising budgets, steady demand for conversion-oriented search ads, and its strong position in China’s AI Cloud market as key factors. Baidu’s commitment to AI development further enhances its growth prospects and establishes it as a prominent player in the AI space.

Analyst comment

Positive news. Baidu’s focus on its core ads business, potential for a cyclical recovery in advertising budgets, steady demand for conversion-oriented search ads, and strong position in China’s AI Cloud market are expected to drive market share growth and revenue growth. Baidu’s commitment to AI development solidifies its position as a leading player in the AI landscape. Analysts predict Baidu’s stock price to reach US$150 per share.

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Lilu Anderson is a technology writer and analyst with over 12 years of experience in the tech industry. A graduate of Stanford University with a degree in Computer Science, Lilu specializes in emerging technologies, software development, and cybersecurity. Her work has been published in renowned tech publications such as Wired, TechCrunch, and Ars Technica. Lilu’s articles are known for their detailed research, clear articulation, and insightful analysis, making them valuable to readers seeking reliable and up-to-date information on technology trends. She actively stays abreast of the latest advancements and regularly participates in industry conferences and tech meetups. With a strong reputation for expertise, authoritativeness, and trustworthiness, Lilu Anderson continues to deliver high-quality content that helps readers understand and navigate the fast-paced world of technology.