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Baidu (BIDU) to Expand Cloud Computing & AI Investments

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Zacks Equity Research
·3-min read
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Baidu, Inc. (BIDU) plans to expand investments in emerging technologies like artificial intelligence (AI), cloud computing, 5G, IoT and blockchain, among others.

Though the amount of investment has not been disclosed yet, the China-based e-commerce giant plans to deploy 5 million intelligent cloud servers by 2030. In addition to this, it plans to train 5 million AI specialists over the next five years.

In regard to the above commitment, the company has already been working with many China universities to develop AI-related courses and train individuals in this space.

The expanding investment is in line with its strategy of strengthening presence in AI and the cloud computing business. In addition, the investment would help it compete against rivals, namely Alibaba BABA, Amazon AMZN and Alphabet GOOGL, in these emerging markets.

Baidu, Inc. Price and Consensus


Baidu, Inc. Price and Consensus
Baidu, Inc. Price and Consensus

Baidu, Inc. price-consensus-chart | Baidu, Inc. Quote

Baidu’s Investment Relevant at the Present Time

In the current scenario, wherein the coronavirus pandemic is turning from bad to worse, people have to maintain social distancing and work remotely. Therefore, most of the companies need to move bulk of their workloads to the cloud. On top of that, consumers have started to shop online due to coronavirus-induced lockdown. Thus, any consumer-oriented business needs to have a digital presence built on the cloud in order to survive.

Resultantly, cloud computing is emerging as a key technology to fight the battle against coronavirus. This technology is seeing higher usage globally as it allows data interoperability in a scalable, cost-efficient way by data collection, processing, analyzing and sharing across platforms.

Coming to AI, the company is fast becoming the most significant and dominant general purpose technology. The coronavirus crisis, which has been disrupting many industries, may actually speed up the adoption of AI. After all, AI has touched almost every sphere, including advertising, healthcare, robotics, retail, video streaming, gaming and urban development.

The AI market, anyhow, is poised to see 46.2% average annual growth rate between 2019 and 2025, per Grand View Research.

In addition, 5G is set to proliferate in 2020. The fifth-generation mobile network is touted to revolutionize the way we interact with technology, thereby facilitating faster download speeds and seamless transfer of data. 5G is expected to further facilitate rapid adoption of IoT and connected smart-based devices, along with emerging applications like AR, VR and AI. Moreover, 5G enables advanced technologies in the IoT space, for instance, extending sensor driven IoT capabilities to drones, actuators and robots.

As such, 5G infrastructure and market are expected to witness a CAGR of 67.1% and reach $47.78 billion by 2027, per a Research and Markets report.

Hence, Baidu’s decision to invest in these growing technologies makes complete sense.

Bottom Line

This latest move underscores Baidu’s growing interest in these highly promising spaces. It appears that the company is flexing its muscles to leverage the concept of consumer convenience in a bid to impress both customers and investors.

Zacks Rank

Currently, Baidu carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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