Baidu's AI Initiatives Are Exciting, What About Search And The Rest?

Michael Ngan169 FollowersFollow5ShareSavePlay(8min)CommentsSummaryBaidu's core search business faces structural challenges with stagnant MAU and declining ARPU.Given legacy business headwinds, BIDU is leveraging AI initiatives to drive future growth, with AI infrastructure and applications gaining momentum.Arguably, Baidu's recent outperformance attributes much to its AI-Chip progress of design Kunlunxin, which is in the process of IPO amongst peers with lofty valuations.Despite the strong momentum of growth outside of search, these don't offer the same level of profitability and are thus a major headwind. V2images/iStock Unreleased via Getty Images Thesis Baidu, Inc. (BIDU) is a hold in my opinion. Since 2H25, the stock has surged significantly, given the narrative of AI hardware reshoring. Domestic fabless designers like Cambricon and Moore Threads have done exceptionally well, backed byThis article was written byMichael Ngan169 FollowersFollowI specialize in fundamental research in the H and A share markets. I understand that reasoning and conviction are different things. If I can't offer the latter, at least I want to break down the core drivers and workings of the business along with my opinion. Seek your alphas accordingly.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.