This Chinese AI/internet company beat analysts’ estimates by $0.68 last year, and Wall Street is forecasting 30.9% growth for 2020.
Baidu, Inc. (BIDU)
From Contrarian Outlook
Artificial intelligence is bound to change the future of the world. By fiscal year 2025, the artificial intelligence market size is expected to be $390.9 billion. However, this number does not tell the whole story. By FY2030, the projected growth of global GDP as a result of artificial intelligence is expected to be $15.7 trillion. This projection bodes well for AI stocks.
Clearly, this is a game changing technology for the world. The impact of AI will be felt across industries. As an example, AI-powered autonomous vehicles have the potential to reduce road accidents. Similarly, AI can prevent 86% of cyber-attacks.
Further, as research article from Harvard Business Review suggests, AI-driven companies can outstrip traditional firms in the long-term. This makes the adoption of AI a necessity across industries.
Considering the potential for growth, there are several companies in the race to grab market share.
My focus is on a few AI stocks that can make significant inroads in AI in the coming years. These companies are likely to be long-term value creators as business from AI grows. Furthermore, these companies will shape a better and safer world through their AI-driven innovation.
The Senate passed a bill that could delist Chinese companies from the U.S. stock exchange. This created some jitters for Chinese-listed stocks. However, I believe that Baidu is among the quality AI stocks from China and can pass the stringent compliance.
Specific to AI, Baidu has been increasing investments in the segment, which promises to be a potential value creator for the company. Talking about the focus on AI, Baidu has filed 5,712 AI-related patents as of October 2019.
In the autonomous vehicle segment, the company has already deployed more than 100 vehicles in 17 cities in China. Baidu has also been using AI to help health organizations cope with the novel coronavirus pandemic.
From a financial perspective, Baidu reported cash and equivalents of $20.7 billion as of March 2020. This gives the company ample financial flexibility to pursue investments and innovation related to AI. I believe that the company is well positioned to accelerate top-line growth in the coming years. This makes BIDU stock attractive, coupled with the fact that the stock currently trades at a P/E ratio of just 15.3.
Brett Owens, Contrarian Outlook, BNK Invest Inc., 500 North Broadway, Suite 265, Jericho, NY 11753 USA, 516-620-4294, info@bnkinvest.com, May 22, 2020