Baidu: Undervalued Tech Giant with Promising Future

Baidu's recent 5.9% gain and 10.9% month-over-month increase raise questions about the stock's momentum. With a robust value score of 5 out of 6, Baidu appears undervalued by multiple valuation methods, including DCF analysis. Analysts expect Baidu's free cash flow to climb to CN¥27.4 billion by 2028, supporting a higher fair value for the stock. Baidu's intrinsic value is estimated at $152.07 per share, with the stock trading at a 37.3% discount to this value.

Baidu Inc. (NASDAQ: BIDU) has seen a significant rise in its stock price, gaining 5.9% on July 2, 2025, and posting a month-over-month increase of 10.9%. This performance has raised questions about the stock's momentum and its valuation. With a robust value score of 5 out of 6, Baidu appears undervalued by multiple valuation methods, including Discounted Cash Flow (DCF) analysis. Analysts expect Baidu's free cash flow to climb to CN¥27.4 billion by 2028, supporting a higher fair value for the stock. Baidu's intrinsic value is estimated at $152.07 per share, with the stock trading at a 37.3% discount to this value [1].

The stock's recent surge can be attributed to several factors. Baidu's AI and semiconductor initiatives have been a driving force behind its stock performance. The company's subsidiary, Kunlunxin, secured a $139 million AI chip order from China Mobile, marking a significant contract for its domestic chip production [2]. This move aligns with China's push to reduce reliance on foreign GPU technology and underscores Baidu's strategic role in advancing local AI infrastructure.

Moreover, Baidu's AI Cloud division has shown resilience amid broader advertising revenue challenges, positioning it as a key player in China's tech self-sufficiency initiatives. The integration of CUDA-compatible chips offers cost-effective alternatives for developers transitioning from foreign technologies, enhancing Baidu's competitive edge [2].

In addition to its AI and semiconductor advancements, Baidu has also been leveraging offshore RMB bonds to fund its AI and ESG projects. The company's 10-billion-yuan dim sum bond issuance highlights how low-cost offshore financing is reshaping capital structures and creating opportunities for investors [3]. Baidu's strategic use of dim sum bonds aligns with China's “30/60 dual carbon” goals, positioning the company as a bridge between state-driven sustainability targets and private-sector innovation.

While Baidu's recent performance and valuation indicate a promising outlook, investors should remain cautious. Regulatory shifts in China's tech sector could impact project timelines, and geopolitical tensions may introduce currency risks. Diversification across sectors and geographies remains key.

In conclusion, Baidu's recent stock performance and valuation suggest a company with a strong strategic focus on AI and semiconductor advancements. The company's use of low-cost offshore financing and its alignment with global ESG trends present opportunities for investors. However, the risks associated with regulatory shifts and geopolitical tensions should be carefully considered.

References:
[1] https://www.ainvest.com/news/baidu-surges-4-76-1-03b-trading-boom-ai-chips-power-69th-market-activity-rank-2508/
[2] https://www.ainvest.com/news/baidu-strategic-dim-sum-bonds-ai-esg-driven-growth-unlocking-alpha-shifting-capital-landscape-2508/