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

• Market Cap: HK$361.65B
• Dividend Yield: N/A
• Average Volume (3M): 20.98M
• Price to Earnings (P/E): 12.4
• Beta (1Y): 1.34
• Revenue Growth: -1.69%
• EPS Growth: 42.04%
• Country: HK
• Employees: 35,900
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 1.85
• Shares Outstanding: 2,225,827,000
• 10 Day Avg. Volume: 38,960,584
• 30 Day Avg. Volume: 20,977,355
• PEG Ratio: -0.72
• Price to Book (P/B): 0.82
• Price to Sales (P/S): 1.63
• P/FCF Ratio: 16.54
• 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$118.57
• Price Target Upside: -9.83% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 77 Outperform
• Price Target: HK$128.00 ▼(-2.66% Downside)

Baidu's overall stock score is driven by strong technical indicators and a solid valuation, despite financial performance challenges and mixed earnings call results. The company's focus on AI and autonomous driving presents growth opportunities, but declining revenue and cash flow issues need addressing.

Positive Factors

AI Cloud Revenue Growth

The strong growth in AI cloud revenue indicates Baidu's successful expansion in AI services, which can drive long-term revenue diversification and resilience.

Autonomous Driving Expansion

The rapid expansion of autonomous driving services positions Baidu as a leader in this emerging market, promising future growth and competitive advantage.

AI Transformation of Search

The integration of AI in search enhances user experience and engagement, potentially boosting Baidu's core business and advertising revenue over the long term.

Negative Factors

Declining Online Marketing Revenue

The decline in online marketing revenue highlights challenges in Baidu's core business, potentially impacting its primary revenue stream and necessitating strategic adjustments.

Negative Free Cash Flow

Negative free cash flow raises concerns about Baidu's cash generation ability, which could affect its financial flexibility and investment capacity in the long term.

Revenue Decrease in iQIYI

The revenue decline in iQIYI suggests challenges in Baidu's media segment, potentially affecting overall revenue growth and necessitating strategic focus to regain traction.

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, the cash flow situation shows potential constraints, indicating a need for improvement 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	132.85B	133.13B	134.60B	123.67B	124.49B	107.07B
Gross Profit	62.59B	67.02B	69.57B	59.74B	60.18B	51.92B
EBITDA	34.64B	35.95B	36.53B	30.70B	27.12B	32.87B
Net Income	27.86B	23.76B	20.32B	7.56B	10.23B	22.47B
Balance Sheet
Total Assets	450.57B	427.78B	406.76B	390.97B	380.03B	332.71B
Cash, Cash Equivalents and Short-Term Investments	123.87B	127.44B	193.90B	174.00B	180.09B	162.18B
Total Debt	91.84B	79.32B	84.59B	91.35B	91.51B	82.59B
Total Liabilities	152.66B	144.17B	144.15B	153.17B	156.08B	140.87B
Stockholders Equity	275.06B	263.62B	243.63B	223.48B	211.46B	182.70B
Cash Flow
Free Cash Flow	-9.28B	13.10B	25.32B	17.78B	8.88B	18.87B
Operating Cash Flow	-243.00M	21.23B	36.62B	26.17B	20.12B	24.20B
Investing Cash Flow	-29.35B	-8.55B	-50.40B	-3.94B	-31.44B	-27.55B
Financing Cash Flow	4.28B	-13.76B	-14.16B	-6.39B	23.40B	5.67B

Baidu, Inc. Class A Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 131.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 131.5 is above the 20-day moving average (MA) of 103.96, above the 50-day MA of 93.73, and above the 200-day MA of 87.66, indicating a bullish trend. The MACD of 10.34 indicates Negative momentum. The RSI at 81.08 is Negative, neither overbought nor oversold. The STOCH value of 84.96 is Negative, 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
1024	79 Outperform	327.38B	18.64	24.73%	―	10.72%	17.05%
0700	79 Outperform	5.83T	26.19	18.66%	0.70%	11.41%	39.10%
9888	77 Outperform	HK$361.65B	12.40	10.28%	―	-1.69%	42.04%
1698	76 Outperform	271.16B	26.76	12.21%	0.73%	10.25%	84.17%
9898	71 Outperform	23.84B	8.88	8.64%	6.59%	0.99%	14.41%
0772	60 Neutral	43.41B	300.99	-1.14%	―	-10.26%	-85.75%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%