3 Reasons to Hold BIDU Stock Now Despite a 42.3% Year-to-Date Rally

Baidu BIDU has surged 42.3% year to date, outperforming the Zacks Internet-Services industry and the Zacks Computer and Technology sector, which have advanced 28.9% and 22.9%, respectively. The rally reflects renewed investor confidence in Baidu’s accelerating AI Cloud growth, expanding global footprint of its autonomous driving platform Apollo Go and steady progress in applying generative AI across its ecosystem. As the company advances these initiatives amid intensifying competition, investors face a key question: should they add exposure now or wait for a more attractive entry point ahead? Let's delve deeper to find out.

BIDU’s YTD Performance

Apollo Go’s Global Expansion Adds Strategic Optionality

Baidu’s autonomous driving arm, Apollo Go, has emerged as a central pillar of the company’s long-term growth strategy. The platform has now surpassed 14 million cumulative rides, reflecting triple-digit year-over-year growth and reinforcing Baidu’s leadership in China’s autonomous mobility landscape. Strategic partnerships with Uber and Lyft mark the beginning of a global rollout across Asia, the Middle East and Europe, enabling Baidu to scale through established ride-hailing networks while maintaining an asset-light model that limits capital intensity.

Operational breakeven in early domestic markets highlights the strength of Apollo Go’s economics, particularly as expansion moves toward higher-fare international cities. The purpose-built RT6 vehicle — engineered for Level 4 autonomy and among the lowest-cost production models in its class — provides a durable cost advantage that should widen as fleet deployment increases. With active right-hand-drive testing in Hong Kong and new operations in Dubai and Abu Dhabi, Baidu is extending its technological leadership into more complex traffic environments.

Competition in autonomous mobility is intensifying globally, with Tesla TSLA advancing its Full Self-Driving system and pursuing wider commercial deployment. However, Baidu’s Apollo Go already operates fully driverless fleets across multiple Chinese cities under regulatory approval, underscoring a clear execution lead in large-scale autonomy. As regulatory frameworks mature worldwide, Apollo Go offers Baidu a differentiated, potentially multibillion-dollar growth engine that extends well beyond its legacy advertising business.

Baidu's AI Advancement Creates Bright Growth Prospects

Baidu’s accelerating artificial intelligence capabilities continue to shape its long-term growth narrative. BIDU’s ERNIE 4.5 foundation models and Qianfan Cloud platform form the backbone of its AI ecosystem, offering enterprises an end-to-end suite for model training, deployment and application development. Qianfan’s expanding model library, which includes Baidu’s open-sourced ERNIE models and third-party multimodal systems, is enhancing flexibility across enterprise use cases while improving inference efficiency and cost performance.

Baidu’s AI Cloud has maintained its leadership position as China’s top-ranked AI cloud provider for the sixth consecutive year, supported by its four-layer architecture that integrates infrastructure, frameworks, models and applications. The platform’s growing suite of AI tools — including Comate, an AI coding assistant and Miaoda, a no-code development platform — continues to expand developer adoption and strengthen the company’s ecosystem reach.

While Baidu remains well-positioned in AI infrastructure, continued reinvestment is expected to keep margins and free cash flow under pressure in the near term. Sustaining leadership will hinge on the faster commercialisation of AI Search and Qianfan Cloud, alongside demonstrating that heavy upfront spending can evolve into scalable, recurring revenue over time.

Valuation Discount Provides Margin of Safety

Baidu trades at a forward P/E of 14.82X, representing a 38% discount to the sub-industry average of 23.98X and nearly 50% below the sector multiple of 29.24X, indicating that the market may still be undervaluing the company’s long-term AI potential and growing exposure to autonomous mobility.

Baidu’s Valuation

This valuation gap stands out when compared with its peers. Alibaba BABA trades at 18.51X forward earnings, while Tencent TCEHY commands an even higher 21.16X multiple, both reflecting premium valuations as they expand into enterprise AI and digital services. The contrast is further underscored by Tesla’s 190.03X multiple, which captures global investor optimism for autonomous and AI-driven mobility, whereas Baidu’s fully driverless operations remain more conservatively priced despite clear progress in commercialisation.


The discount largely reflects investor caution around Baidu’s advertising slowdown and uneven cash flows amid heavy AI reinvestment. Yet the company’s net cash position of RMB 155.1 billion as of June 30, 2025, provides ample flexibility to sustain innovation while maintaining financial stability. In the second quarter of 2025, non-online marketing revenue surpassed RMB 10 billion, up 34% year over year, supported by 27% growth in AI Cloud to RMB 6.5 billion, signaling accelerating diversification and a steady shift toward higher-quality, recurring revenue streams over time.

However, the Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $4.34 billion, indicating a 9.33% year-over-year decline. The consensus mark for earnings per share is pegged at $1.32, down a penny over the past 30 days and implying a 44.30% year-over-year decline. These figures highlight how intensifying competition and slower AI monetization are weighing on near-term performance visibility, particularly as Alibaba and Tencent continue expanding their AI-led platforms and enterprise partnerships, reinforcing their ecosystem advantage over smaller players.

Baidu, Inc. Price and Consensus

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

Conclusion

Baidu’s accelerating investments in artificial intelligence, cloud infrastructure and autonomous driving are laying the foundation for its next growth phase. Apollo Go’s expanding international presence, the continued scaling of Qianfan Cloud and the evolution of its ERNIE foundation models position the company at the centre of China’s AI ecosystem. However, slower monetisation and ongoing reinvestment are likely to keep near-term profitability constrained.
At current levels, Baidu’s valuation already reflects much of the optimism surrounding its transformation, yet still trades at a meaningful discount to peers such as Alibaba, Tesla and Tencent. This combination of structural progress and conservative pricing supports a measured approach. Prudent investors may prefer to hold existing positions and new investors should wait for a more attractive entry point as clearer catalysts for AI commercialisation and margin recovery emerge.

BIDU stock currently 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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This article originally published on Zacks Investment Research (zacks.com).

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