Back to top

Image: Bigstock

Bull of the Day: Baidu (BIDU)

Read MoreHide Full Article

Baidu, a Zacks Rank #1 (Strong Buy), dominates China’s search engine market and serves hundreds of millions of users, developers, and enterprises daily. The company offers search-based, feed-based, and other online marketing services, as well as cloud and AI services. Founded in 2000 as a search engine company, Baidu has evolved into a comprehensive AI powerhouse.

The stock recently broke out to a 52-week high on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.

Baidu is part of the Zacks Internet – Services industry group, which currently ranks in the top 27% out of approximately 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months, just as it has over the past year:

Zacks Investment Research
Image Source: Zacks Investment Research

Take note of the favorable characteristics for this group below. Stocks in this industry are relatively undervalued based on traditional valuation metrics. They are also projected to experience above-average earnings growth, which signifies a powerful combination that should lead to higher prices in the future.

Zacks Investment Research
Image Source: Zacks Investment Research

Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.

Company Description

Baidu provides online marketing and non-marketing value added services through an internet platform in the People’s Republic of China. Its mission is to “make the complicated world simpler through technology.” 

Since 2010, Baidu has heavily invested in artificial intelligence, developing a full AI stack that spans foundational chips and infrastructure, the open-source PaddlePaddle deep learning framework, and a wide array of AI-powered applications.

The company’s ERNIE bot is a generative AI product and knowledge-enhanced large language model (LLM). The bot has gained significant traction, recently surpassing the 200 million monthly user mark.

In addition, Baidu operates its Apollo Go robotaxi service, offering fully driverless rides in cities like Hong Kong and Wuhan. Late last year, the service hit the 250,000 milestone in terms of weekly rides. Apollo Go has accumulated over 140 million driverless miles. This highlights Baidu’s strong momentum in autonomous driving amid broader optimism surrounding AI.

Baidu is also set to spin off its AI chip unit, Kunlunxin, as the company seeks to accentuate its standalone value and entice semiconductor-focused investors. As we’ll see, analysts covering BIDU stock remain optimistic about its future growth prospects in areas such as autonomous driving and cloud computing.

Earnings Trends and Future Estimates

Baidu has shown a consistent ability to deliver positive earnings surprises; the leading AI company hasn’t missed the earnings mark in many years. The company posted a trailing four-quarter average surprise of nearly 30%, reflecting strong execution in converting AI-driven demand into results. This track record aligns perfectly with the power of the Zacks Rank system, which prioritizes stocks showing upward earnings revisions.

Baidu’s transformation has been remarkable. The company reported third-quarter results back in November that exceeded expectations, with adjusted EPS of $1.56 beating the Zacks Consensus Estimate by 30%.

The Beijing-based company has been the beneficiary of improving earnings estimate revisions as of late. Looking into fiscal 2026, analysts have raised their annual EPS estimates by 14.83% in the past 60 days. The Zacks Consensus Estimate now stands at $9.60 per share, reflecting better than 35% growth relative to the prior year.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s Get Technical

Baidu’s stock performance is reflective of the fundamental story, as shares have surged to a series of 52-week highs in early 2026. Only stocks that are in extremely powerful uptrends are able to make this type of price move and widely outperform the market. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.

StockCharts
Image Source: StockCharts

Notice how shares remain above upward-sloping 50-day (blue line) and 200-day (red line) moving averages. The stock has advanced more than 70% over the past six months, and momentum appears to be continuing this year. With both strong fundamentals and technicals, BIDU (BIDU - Free Report) stock is poised to continue its outperformance.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Baidu has recently witnessed positive revisions. As long as this trend remains intact (and BIDU continues to deliver earnings beats), the stock will likely continue its bullish run throughout this year.

Bottom Line

Backed by a leading industry group and robust history of earnings beats, it’s not difficult to see why this company is a compelling investment. Currently, BIDU carries a Zacks Rank #1 (Strong Buy), driven by favorable estimate momentum.

Solid institutional buying should continue to provide a tailwind for the stock price. Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. If you haven’t already done so, be sure to put BIDU on your shortlist.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Baidu, Inc. (BIDU) - free report >>

Published in