Chinese tech giant Baidu has clinched a collaboration deal with China Huaneng Group Co. to accelerate the power utility’s digital transformation and modernize the country’s energy industry. BIDU shares jumped more than 5% in Monday’s pre-market trading.
According to the terms of the memorandum of understanding, Baidu’s (BIDU) partnership with state-owned power generator China Huaneng will include an artificial intelligence-powered infrastructure to boost efficiencies and users’ experience. Specifically, the two companies will jointly develop an automated financial shared services platform, as well as apply AI and big data technologies to the energy and power field.
Additionally, the partnership seeks to create energy-related data services that are more digitized, intelligent, and connected to the Internet.
“China’s economy is turning to the direction of high-quality development, and AI is a new kinetic energy and new engine that will drive this high-quality development,” said Baidu’s Chief Technology Officer Haifeng Wang. “It is hoped that Huaneng will give fully play to its leading position in the energy industry and its advantages in a wide range of industry scenarios, and Baidu will make full use of its technological advantages in AI, big data, and cloud computing to strengthen all-round cooperation and support the digital and intelligent upgrading of the energy industry.”
Additionally, Baidu will help build a platform for independent and free exchanges of energy data, a professional-level database for the industry, and a modern energy SaaS (software as a service) system.
Baidu’s AI cloud already provides intelligent energy solutions to the energy industry. The company has strategic cooperation agreements with leading energy companies such as State Grid. Baidu is working with these partners to digitize and intelligently transform processes like energy production and electricity dispatching management to provide users with more efficient, cleaner, and lower-carbon energy services.
Going forward, the Chinese search engine company targets partnerships with additional energy industry partners for the construction of smart energy systems and to deploy new infrastructure for a cleaner and more intelligent energy industry.
Shares in BIDU have rallied 31% year-to-date, and analysts have a bullish outlook on the stock with a Strong Buy consensus rating. That’s alongside an average analyst price target of $341, implying that another 20% upside potential lies ahead.
Barclays analyst Gregory Zhao last month lifted the stock’s price target to $400 from $350 and maintained a Buy rating as he believes that BIDU’s AI cloud will be a key revenue driver, which is gaining robust traction from both general and vertical cloud services.
Zhao added that Baidu is making a turnaround to “rejoin the first echelon” of the China internet sector. (See BIDU stock analysis on TipRanks).