2023-06-20 12:41:37 ET
Baidu Inc ( NASDAQ: BIDU ) will benefit as investors continue to chase the rapid growth in artificial intelligence, said a Morgan Stanley analyst in his note titled “The Best AI Play in China” on Tuesday.
Baidu stock has upside to $190
Gary Yu now rates the Chinese stock at “overweight” and sees upside in it to $190 – about a 33% premium on its current price.
The analyst is bullish primarily because Baidu jumped ahead of its rivals in China to launch a product that closely resembled ChatGPT.
We believe China’s A.I. evolution is at an inflection point, and Baidu stock is the best play to capture the $7.0 trillion A.I. internet opportunity.
He’s convinced that the tech titan will also benefit from a continued shift to online spending. “BIDU” is currently down 10% versus its year-to-date high.
Baidu will enhance its AI models over time
Gary Yu expects artificial intelligence to deliver about a 12% upside to the company’s core revenue estimates for 2025.
Its cloud platform has already attracted more than 200,000 companies and AI, as per the Morgan Stanley analyst, will help sustain that demand moving forward. His research note reads:
We expect AI to drive business transformation with improving productivity and efficiency via higher IT spending and faster cloud adoption, with Baidu gaining cloud market share given its AI capabilities.
Yu expects the company to enhance its AI models over time as it has access to an extensive set of search data. Other reasons cited for the constructive view on Baidu stock include relatively fewer regulatory hurdles.
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