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      A Stock Upgrade For Baidu (BIDU) Led To A Rise In Its Price

      By Fahim Awan

      Published on

      November 24, 2023

      9:55 AM UTC

      A Stock Upgrade For Baidu (BIDU) Led To A Rise In Its Price

      Baidu, Inc. (NASDAQ: BIDU) experienced a notable uptick of 5.91%, culminating in a closing figure of $120.12 in the preceding trading session. This surge in Baidu’s market value was catalyzed by a favorable shift in sentiment following an analyst upgrade. Nomura, the analytical firm, elevated its assessment from “Neutral” to “Buy” on Wednesday, maintaining the target price at $145.

      This positive trajectory coincided with BIDU’s disclosure of Q3 2023 financial results, showcasing revenue that surpassed forecasts. Noteworthy is Baidu’s strategic accumulation of artificial intelligence chips, a preemptive measure against potential constraints stemming from U.S. technology export restrictions—a testament to BIDU’s robust positioning.

      The reserve of AI chips empowers Baidu to enhance its Ernie large language model (LLM) for a substantial duration, extending up to two years, while actively exploring alternative solutions. The CEO of BIDU emphasized that current limitations on chip exports to China have minimal immediate ramifications for the company.

      Baidu’s ample chip reserves, coupled with alternative strategies, assure sustained support for a plethora of AI-native applications, safeguarding its user base. Despite the sanguine outlook for Baidu, the CEO acknowledged the broader impact of U.S. sanctions on advanced AI chip exports to China, particularly from companies like Nvidia.

      Foreseeing potential repercussions, including a consolidation of large language models in a country harboring over 230 such models, BIDU remains vigilant. Conversely, the restrictive measures are poised to affect cloud computing enterprises such as Alibaba and Tencent, with Alibaba deferring its cloud unit’s independent listing due to uncertainties.

      Baidu, with a predominant revenue stream from advertising, reported a Q3 revenue of $4.78 billion, marking a 6% YoY increase, surpassing analysts’ expectations set at $4.76 billion. While Baidu did not explicitly disclose its alternative chip pursuits, it emphasized leveraging its unique AI architecture and algorithmic strengths to enhance operational efficiency.

      Notably, Baidu proactively secured domestically-produced AI chips from Huawei in August, anticipating potential constraints and providing a viable alternative to Nvidia.

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