Baidu, Inc. Class A (9888) AI Stock Analysis

• Market Cap: HK$292.89B
• Dividend Yield: N/A
• Average Volume (3M): 13.90M
• Price to Earnings (P/E): 10.9
• Beta (1Y): 1.34
• Revenue Growth: -1.69%
• EPS Growth: 42.04%
• Country: HK
• Employees: 35,900
• Sector: Communication Services
• Sector Strength: 96
• Industry: Internet Content & Information
• EPS (TTM): 1.85
• Shares Outstanding: 2,225,827,000
• 10 Day Avg. Volume: 23,782,468
• 30 Day Avg. Volume: 13,895,081
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$106.60
• Price Target Upside: -7.38% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 80 Outperform
• Price Target: HK$133.00 ▲(15.55% Upside)

Baidu, Inc. demonstrates strong financial performance and technical indicators, with notable growth in AI and autonomous driving sectors. However, challenges in cash flow and declining online marketing revenue temper the overall outlook. The stock is reasonably valued, but the absence of a dividend yield may deter some investors.

Positive Factors

AI Cloud Revenue Growth

The significant growth in AI cloud revenue highlights Baidu's successful expansion into AI-driven products, enhancing its market position and long-term growth prospects in the technology sector.

Autonomous Driving Expansion

Baidu's expansion in autonomous driving, with substantial ride growth and partnerships, strengthens its competitive edge in the evolving transportation sector, promising future revenue streams.

AI Transformation of Search

The rapid AI transformation of Baidu's search engine enhances user experience and engagement, potentially increasing advertising revenue and solidifying its leadership in the search market.

Negative Factors

Online Marketing Revenue Decline

The decline in online marketing revenue indicates challenges in Baidu's core business, potentially affecting its cash flow and necessitating strategic adjustments to maintain profitability.

Negative Free Cash Flow

Negative free cash flow, due to high AI investments, may constrain Baidu's financial flexibility, impacting its ability to fund new projects or return capital to shareholders.

Revenue Decrease in iQIYI

The decline in iQIYI's revenue suggests potential issues in Baidu's entertainment segment, which could hinder diversification efforts and overall revenue growth if not addressed.

Baidu, Inc. Class A Business Overview & Revenue Model

Company Description

Baidu, Inc. offers internet search services in China. It operates through Baidu Core and iQIYI segments. The company offers Baidu App to access search, feed, and other services using mobile devices; Baidu Search to access its search and other services; Baidu Feed that provides users with personalized timeline based on their demographics and interests; Baidu Health that helps users to find the doctor and hospital for healthcare needs; and Haokan, a short video app. It also provides Baidu Knows, an online community where users can ask questions to other users; Baidu Wiki; Baidu Experience; Baidu Post; Baidu Wenku; Baidu Maps, a voice-enabled mobile app that provides travel-related services; Baidu Drive; Baijiahao; and DuerOS, a smart assistant platform. In addition, it offers online marketing services, which include pay for performance, an auction-based services that allow customers to bid for priority placement of paid sponsored links and reach users who search for information related to their products or services; other marketing services that include display-based marketing services and other online marketing services based on performance criteria other than cost per click; mobile ecosystem, a portfolio of apps, including Baidu App, Haokan, and Baidu Post; various cloud services and solutions, such as platform as a service, software as a service, and infrastructure as a service; self-driving services, including maps, automated valet parking, navigation pilot, electric vehicles, and robotaxi fleets, as well as Xiaodu smart devices. Further, the company provides iQIYI, an online entertainment service, including original and licensed content; other video content and membership; and online advertising services. Baidu, Inc. has strategic partnership with Zhejiang Geely Holding Group. The company was formerly known as Baidu.com, Inc. Baidu, Inc. was incorporated in 2000 and is headquartered in Beijing, China.

How the Company Makes Money

Baidu primarily generates revenue through its online marketing services, where businesses pay for advertising on Baidu's platforms, leveraging its search engine's massive user base for visibility and customer acquisition. The company's advertising services include pay-for-performance services and other marketing offerings. Additionally, Baidu has been expanding its revenue streams by investing in artificial intelligence and cloud computing, offering AI solutions and cloud-based services to enterprises. Partnerships and collaborations in the autonomous driving and smart device sectors also contribute to Baidu's revenue, as it commercializes its AI technologies and products.

Baidu, Inc. Class A Financial Statement Overview

Summary

Baidu, Inc. presents a strong financial position with solid margins and profitability in the income statement and a stable balance sheet with low leverage. However, cash flow constraints are evident, with low free cash flow relative to net income, suggesting potential challenges in cash generation.

Income Statement

Baidu, Inc. shows a strong income statement performance with a consistent revenue base and improving profitability. The gross profit margin for the TTM is 49.06%, reflecting efficient cost management. The net profit margin has increased to 19.41% from 17.84% in the previous annual report, indicating improved net income relative to revenue. Revenue growth was modest but steady. The EBIT margin improved significantly compared to historical losses, now at 15.13%, and the EBITDA margin is 25.45%, highlighting strong operational efficiencies.

Balance Sheet

The balance sheet demonstrates stability with a healthy equity ratio of 59.41%, indicating robust equity financing relative to assets. The debt-to-equity ratio is 0.38, suggesting a conservative leverage approach. ROE is 9.65%, reflecting decent returns for equity holders. Overall, the balance sheet is strong with substantial equity and manageable debt levels.

Cash Flow

Cash flow analysis shows some concerns despite overall positive cash generation. The free cash flow growth rate has slowed, highlighting potential challenges in cash generation relative to past performance. The operating cash flow to net income ratio of 0.35 indicates that a smaller portion of net income is turned into cash, which may suggest cash flow constraints. The free cash flow to net income ratio is only 0.06, highlighting low free cash flow relative to net income, possibly due to high capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	134.06B	133.13B	134.60B	123.67B	124.49B	107.07B
Gross Profit	65.77B	67.02B	69.57B	59.74B	60.18B	51.92B
EBITDA	34.11B	35.95B	36.53B	14.51B	14.10B	14.34B
Net Income	26.03B	23.76B	20.32B	7.56B	7.59B	22.47B
Balance Sheet
Total Assets	453.98B	427.78B	406.76B	390.97B	380.03B	332.71B
Cash, Cash Equivalents and Short-Term Investments	141.77B	127.44B	193.90B	174.00B	180.09B	162.18B
Total Debt	102.05B	79.32B	84.59B	91.35B	91.51B	82.59B
Total Liabilities	163.91B	144.17B	144.15B	153.17B	156.08B	140.87B
Stockholders Equity	269.75B	263.62B	243.63B	223.48B	211.46B	182.70B
Cash Flow
Free Cash Flow	1.66B	13.10B	25.32B	17.78B	8.88B	18.87B
Operating Cash Flow	9.01B	21.23B	36.62B	26.17B	20.12B	24.20B
Investing Cash Flow	-6.64B	-8.55B	-50.40B	-3.94B	-31.44B	-27.55B
Financing Cash Flow	4.35B	-13.76B	-14.16B	-6.39B	23.40B	5.67B

Baidu, Inc. Class A Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 115.10
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:9888, the sentiment is Positive. The current price of 115.1 is above the 20-day moving average (MA) of 94.60, above the 50-day MA of 90.04, and above the 200-day MA of 86.57, indicating a bullish trend. The MACD of 5.88 indicates Negative momentum. The RSI at 78.66 is Negative, neither overbought nor oversold. The STOCH value of 79.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:9888.

Baidu, Inc. Class A Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9888	80 Outperform	HK$292.89B	10.85	10.28%	―	-1.69%	42.04%
Sector *	60 Neutral	$47.27B	4.55	-11.27%	4.14%	1.88%	-40.90%
TCTZF	―	$735.71B	25.75	21.04%	0.70%	―	―
CHLLF	―	$5.45B	298.62	0.67%	―	―	―
1024	79 Outperform	HK$316.80B	18.50	25.22%	―	10.72%	17.05%
1698	78 Outperform	HK$283.13B	27.64	13.99%	―	10.25%	84.17%
9898	71 Outperform	HK$23.40B	8.72	10.70%	6.74%	0.99%	14.41%

Baidu, Inc. Class A Corporate Events

Baidu Announces Pricing of CNY4.4 Billion Senior Notes

Baidu, Inc. announced the pricing of its CNY4.4 billion senior unsecured notes due 2029, with an interest rate of 1.90%. The proceeds from this offering are intended for general corporate purposes, including debt repayment and interest payments. This strategic financial move is expected to enhance Baidu’s financial flexibility and support its ongoing operations and growth strategies.

The most recent analyst rating on (HK:9888) stock is a Buy with a HK$102.00 price target. To see the full list of analyst forecasts on Baidu, Inc. Class A stock, see the HK:9888 Stock Forecast page.

Baidu Announces CNY-Denominated Senior Notes Offering

Baidu, Inc. has announced its intention to offer CNY-denominated senior unsecured notes in offshore transactions outside the United States, targeting non-U.S. investors. The proceeds from this offering are intended for general corporate purposes, including debt repayment and interest payments, which could enhance Baidu’s financial flexibility and operational capacity. This move may impact the company’s market positioning by strengthening its capital structure and providing resources for future growth initiatives.

The most recent analyst rating on (HK:9888) stock is a Buy with a HK$102.00 price target. To see the full list of analyst forecasts on Baidu, Inc. Class A stock, see the HK:9888 Stock Forecast page.