Baidu Upgraded By KeyBanc Capital, Credit Suisse

Baidu Upgraded By KeyBanc Capital, Credit Suisse


Chinese internet giant Baidu, Inc. (Nasdaq: BIDU) rose more than 3.50% yesterday to close at $251.77, after two major financial institutions issued a bullish view of the stock. Additionally, the latest developments discussed below indicate that the stock is poised for further uptrend in the days to come.

Hans Chung, an analyst at KeyBanc Capital Markets, anticipates Baidu to further increase news feed based ad revenue and monetize its search queries in a better way. The analyst is optimistic about Baidu’s artificial intelligence program so much that he calls it a “call option for long-term growth given the early stage of business and market development.” Based on these assumptions, Chung has upgraded the stocks rating from “sector weight”, to “overweight.”

Likewise, Credit Suisse analyst Thomas Chong is confident of Baidu’s strength in monetising its news feed. Chong upgraded the stock to “outperform”, from “neutral” rating.

As a testimony to Chung’s opinion, Baidu has further simplified its AI platform so that developers can use it with relative ease. The update ensures that tools provided by the platform, including natural language processing and facial recognition, can be deployed without difficulty. It can be remembered that Baidu had announced that it will provide a series of updates to it AI platform at Create 2018 developer conference held in Beijing.

Using the drag-and-drop elements facility provided by the new Baidu Brain 3.0 platform, even those who lack coding skills will be able to use APIs and build applications.

The company has also entered into a partnership with SoftBank’s subsidiary SB Drive. Under the partnership, Baidu will build 10 autonomous driving Apolong buses for SB Drive, which will deliver it to Japan. The delivery is expected to be completed in early 2019.  

Apolong buses carry Level 4 autonomy. This means the bus is “fully autonomous”, but can’t handle all possible scenarios. Until now, Baidu has successfully manufactured 100 Apolong buses in its South China plant. While announcing the agreement at Create 2018 developer conference, Baidu also unveiled a new artificial intelligence chip named “Kunlun”, which can be used to perform complex computing in autonomous driving. The chip is also expected to be used in data centers, provide search rankings, and for natural language processing.  The AI chip is expected to compete with domestic and international tech giants, including Huawei Technologies.

Baidu has also signed a collaboration agreement with Intel to integrate the latter’s Israeli subsidiary Mobileye’s autonomous driving related software Responsibility-Sensitive Safety (RSS) with Apollo Drive and Apollo Pilot program. Furthermore, Baidu will also integrate Mobileye’s Surround Computer Vision Kit. All these factors indicate that the stock of Baidu will remain bullish in the short-term.

The price chart indicates firm support for the stock at 240 levels. The RSI indicator is rising, while the Chaikin money flow indicator is in the positive region. Therefore, we are anticipating an uptrend in the stock price.

Baidu - Technical Analysis - 10th July 2018

Based on the analysis, we are hopeful of generating profit by investing in a call option. Before using our surplus funds to purchase an option contract from one of our reliable binary brokers, we will make sure the stock of Baidu is trading near $250 in NASDAQ. Furthermore, a date around July 18th will be chosen for expiry.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

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