Baidu faces long-term challenges in revenue growth, may not reach trillion-dollar status by 2030.

From The Motley Fool: 2024-06-17 14:00:00

Baidu, former Chinese tech giant, faces long-term challenges since a drop in stock price. Revenue grew rapidly from 2005-2015 but slowed from 2015-2020 due to rising competition. Amid macro challenges, revenue growth for 2021 saw 16%, 2022 saw a decrease of 1%, and 2023 saw a slight increase of 9%. Adjusted EPS growth also varied from (16%) to 37% over the years.

To stabilize growth, Baidu is emphasizing cloud infrastructure and generative AI services to reduce reliance on digital ads. Diversifying its online marketing business through Managed Business Pages and expanding its mobile app are key strategies. Analysts predict a slower growth rate for Baidu’s revenue and EPS from 2023 to 2026, potentially affecting its valuation and market performance.

Despite potential for recovery, Baidu may struggle to regain high growth status due to ongoing U.S.-China tensions and competitive market challenges. Future valuations will likely depend on resolution of trade disputes and the company’s ability to keep up with competitors in the online marketing, cloud, and AI sectors. Baidu’s market cap is projected to increase but may not reach trillion-dollar status by 2030.

Assuming current valuations persist, Baidu’s stock price could rise to $150 or $225 by 2030, boosting its market cap to $54 billion or $81 billion, respectively. However, this growth trajectory may not be enough for Baidu to achieve the trillion-dollar milestone. The company remains a value play contingent on U.S.-China relations, without strong indications of significant growth potential in the near future.



Read more at The Motley Fool: Will Baidu Be a Trillion-Dollar Stock by 2030?