2023-07-13 11:22:23 ET
Daiwa cut Baidu's ( NASDAQ: BIDU ) target price and earnings forecast for 2023, to reflect the Chinese interent serach giant's increasing investments in developing its ChatGPT-like model.
The firm reduced Baidu's price target to HK$183 from HK$186 and maintains a Buy rating.
Daiwa analysts noted that Baidu may see higher costs due to additional workforce for data cleaning and labeling work for its artificial intelligence (AI) model Ernie.
In June, Baidu said that its latest AI model Ernie 3.5 had surpassed OpenAI's ChatGPT on several measures. The company is integrating Ernie Bot across several business lines and is also planning to establish a RMB 1B ($145M) venture capital fund to help start-ups focused on content generated by AI applications.
Daiwa reduced its 2023-2024 earnings per share estimates for Baidu by 2%-6% and expects the company's core revenue to rise 12% on year in Q2.
The analysts also think that the company’s online marketing business for Q2 and Q3 may be slightly better than anticipated.
However, the analysts noted that Baidu's cloud business recovery could be affected by the lagging growth of smart transportation solutions, because of tight budgets of local governments.
More on Baidu
- Baidu And AI: History, Investments, And Regulation
- Baidu Stock: Emerging As A Strong Buy Now (Technical Analysis)
- Baidu: Very Attractively Valued
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Daiwa cuts Baidu's earnings forecast on boosted investments in AI model