The AI ​​era: How Baidu is positioning itself to thrive

One of the biggest technology trends in recent years is the rapid development and adoption of artificial intelligence (AI) technologies, capturing the attention and resources of investors.

However, when asked to name leading AI companies, most investors will repeat the top few names such as Nvidia, Palantir, Microsoftand Alphabet. While these companies are leading the AI ​​revolution, they aren’t the only companies with big bets in the sector.

This article will focus on one of China’s leading tech companies that positioned themselves early to capitalize on the AI ​​wave to greater heights: Baidu Inc. (BIDU 2.00%).

Image source: Getty Images.

Products and services based on artificial intelligence

Founded in 2000, Baidu is one of the first Chinese technology companies that has grown to become a conglomerate with businesses spanning search, advertising, cloud computing, entertainment and more.

Like most technology companies, Baidu’s long-term growth and expansion has resulted from its heavy investments in emerging technologies to continually improve its product offerings. And among all these different technologies, AI is probably the core of Baidu’s focus.

For example, using AI and machine learning technologies, Baidu provides a more personalized experience to users of its search engine app. This helps users get the most relevant search result, improving user experience and long-term engagement. It also helps explain how Baidu could keep its search engine relevant after more than two decades, despite intense competition in the Chinese tech sector. For perspective, Baidu’s monthly active users (MAUs) were 667 million in 2023, covering almost half of the Chinese population.

Another example of how AI helps improve Baidu’s offerings is by incorporating AI-based voice recognition into the search engine, which greatly improves the user experience, especially when using mobile devices for search. AI also helps advertisers get better returns on their advertising budget with more targeted advertising, ensuring that ads reach the right audience at the right time. Additionally, it allows advertisers to do more with less as they can use Baidu’s automation tools to manage their ad campaigns.

In short, Baidu was an early adopter of AI and a big benefactor.

Investments related to artificial intelligence that could fuel future growth

AI could have helped improve Baidu’s existing core offerings, but the most significant potential probably lies in its newer projects in areas such as AI Cloud and autonomous driving.

Take AI Cloud for example. Baidu is one of the leading cloud computing players in China, offering a wide range of services including computing, storage, AI Cloud, Internet of Things, etc. The rapid adoption of AI in the business sector gives Baidu enormous opportunities to attract new customers and provide new services.

For example, Baidu’s generative AI product Ernie Bot (ChatGPT-like service) generated revenue of several hundred million yuan (200 million yuan is equivalent to $28 million) in the fourth quarter of 2023 and is expected to reach several billion yuan (1 billion yuan is equal). $0.14 billion) in 2024. With ChatGPT unavailable in China, the tech company will have a less formidable competitor to compete against. If Baidu can continue to roll out valuable AI-related services as AI technologies mature, it is well-positioned to grow its AI Cloud business for years, if not decades.

In terms of self-driving, Baidu was one of the first in China to research and develop its self-driving offerings. As such, its self-driving service (Apollo Go) has achieved enormous milestones in recent years. For example, Apollo Go offered 826,000 rides in Q1 2024, up 25% year-on-year. Cumulative rides delivered through April 19, 2024 were over 6 million.

Given the immense opportunities in these two areas, Baidu could grow its revenue to several times its current size.

What does it mean for investors?

Most investors looking for AI companies pay most attention to companies listed in the US While this makes sense as the US is a leader on many technological fronts, those looking to venture beyond the US and the West may find companies like Baidu interesting .

In particular, given the considerable attention the Chinese government has paid to the development of its AI technologies and the massive investments Baidu has made over the years, investors should not miss the opportunity to participate in the AI ​​sector in this part of the world. .

All that said, investors should keep a close eye on Baidu in the coming years.