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Yahoo
27-05-2025
- Business
- Yahoo
Baidu vs. Alibaba: Which Chinese AI Stock Is the Better Investment Now?
Baidu BIDU and Alibaba BABA are two of China's tech titans that have increasingly pivoted toward artificial intelligence (AI). Both companies dominate their respective fields – Baidu in online search and AI cloud services, Alibaba in e-commerce and cloud computing – yet they share notable similarities. Each is profitable, generates substantial cash, and has been pouring investments into cutting-edge AI research and fact, Chinese tech companies like Alibaba and Baidu have recently captured renewed investor attention thanks to a series of positive developments (including massive government stimulus and the rise of AI services) after a few challenging years. With China's AI sector booming, these two companies stand out as key players riding the dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now. Baidu, often dubbed 'China's Google,' has successfully repositioned itself as an AI-first company, marking a significant shift toward cloud computing and AI services in recent years. The company's aggressive push into AI has yielded promising results, particularly in its first-quarter 2025 performance. Baidu Core's revenue growth was driven largely by its AI Cloud business, which surged 42% year over year. AI Cloud now represents 26% of Baidu Core's revenue, up from 20% in the same period the previous year, highlighting increasing recognition of Baidu's AI capabilities.A key driver behind Baidu's AI growth is its model-as-a-service platform, Qianfan, which offers an extensive model library and supports fine-tuning of multimodal and reasoning models. By reducing inference costs, Qianfan has made Baidu's cloud offerings especially attractive to enterprise clients, bolstering subscription-based revenue. (read more: Baidu's Q1 Earnings & Revenues Top Estimates, Margins Down Y/Y).Baidu further strengthened its AI leadership with the launch of ERNIE 4.5 and ERNIE X1, and their Turbo versions in April 2025. These models promise superior performance at lower costs, enabled by Baidu's unique four-layer AI architecture that optimizes infrastructure, frameworks, models, and applications. As part of its strategy to drive accessibility, Baidu plans to open-source ERNIE 4.5 by June 30, 2025, helping expand its challenges such as U.S. chip export restrictions, Baidu remains confident in its ability to maintain momentum, citing efficient GPU utilization and growing domestic chip capabilities. Additionally, Baidu's mobile search product is increasingly AI-driven, with 35% of mobile search results now featuring AI-generated content, up from 22% in terms of challenges, the company posted a negative free cash flow of RMB 8.9 billion in the first quarter, largely due to elevated AI investments despite a strong operating margin of 16% for Baidu Core and a non-GAAP margin of 19%. Management signaled further increases in capital outlays for AI Cloud, model development, autonomous driving, and AI search transformation in ongoing weakness in online advertising is a concern. Even in the latest quarter, Baidu's core online marketing revenues declined 6% year over year, extending the prior year's decline. Competition from rivals (e.g., ByteDance's TikTok/Douyin in advertising, Tencent in digital ads, etc.) and the shift of ad budgets to new platforms have made it harder for Baidu to grow its search ad business. In cloud computing and AI, Baidu faces competition from Alibaba Cloud and Tencent Holdings Limited's TCEHY cloud services. Alibaba, China's e-commerce behemoth, has staged a notable comeback in the past year. Alibaba's core strength is its diversified, powerhouse business model. The company operates a vast commerce ecosystem that spans Chinese consumer marketplaces (Taobao, Tmall), international retail platforms (AliExpress, Lazada), wholesale trade, logistics (Cainiao), local services, digital media, and more. These commerce-related segments collectively still account for over half of Alibaba's revenue.A major driver of Alibaba's latest fourth-quarter performance was the strong momentum in its Cloud and AI segments. Alibaba Cloud revenue accelerated 18% year over year, with public cloud services growing even faster. This surge was fueled by robust demand for AI infrastructure, particularly as enterprises—both digital-native and traditional—began migrating workloads to the cloud to deploy AI applications. Notably, AI-related product revenue maintained triple-digit growth for the seventh consecutive quarter, demonstrating sustained momentum. The company's open-sourced Qwen3 model series, spanning multiple sizes and use cases, added further weight to its leadership in AI technology. (read more: Alibaba Q4 Earnings Surpass Estimates, Revenues Increase Y/Y)In the domestic e-commerce segment, Alibaba made meaningful progress in monetization. Taobao and Tmall Group posted a 12% rise in customer management revenue, driven by increased take rates. Key contributors included the rollout of a 0.6% software service fee and deeper adoption of Quanzhantui (QZT), a self-service ad platform designed to boost merchant marketing efficiency. Additionally, the growth in 88VIP memberships (which surpassed 50 million) and rising average revenue per user (ARPU) suggested improving customer loyalty and higher monetization potential. The integration of AI into search, recommendations, and advertising further enhanced user experience and operational Alibaba's capital allocation strategy also underscored its underlying financial strength. The company returned $16.5 billion to shareholders via dividends and buybacks while selling non-core assets to sharpen its focus on AI and core commerce. These actions, combined with a strong net cash position, gave Alibaba the flexibility to continue investing in strategic growth areas such as instant commerce and AI company faces key challenges, including intense competition in China's e-commerce space, rising costs from strategic investments in instant commerce and AI infrastructure, and macroeconomic and geopolitical risks. In the cloud segment, despite robust AI-driven demand, Alibaba is grappling with increased infrastructure costs. The company reported a 76% decline in free cash flow, largely due to elevated capital expenditures related to AI and cloud capacity expansion. These factors are contributing to margin pressure despite strong revenue momentum, as seen in the quarter's 1.9 percentage point quarter-over-quarter decline in adjusted EBITDA margin. While profitability is under pressure in the short term, Alibaba remains focused on long-term growth by streamlining operations and investing in high-potential Alibaba must navigate macroeconomic and geopolitical risks, especially in its international commerce business. Global trade regulation uncertainties and regional economic headwinds present structural challenges that could affect cross-border performance and profitability. As you can see below, Baidu's shares have struggled to gain momentum year to date. Concerns about China's economy and U.S.–China tensions have weighed on sentiment for China-exposed stocks like Baidu. Unlike Baidu, Alibaba's shares have been on a bullish tear, climbing 42.4% so far this year. Image Source: Zacks Investment Research Meanwhile, Baidu's underperformance has left the stock looking quite cheap. At roughly the mid-$80s per share, Baidu trades at about 7.84X forward 12-month P/E ratio compared with BABA's 11.13X. Image Source: Zacks Investment Research Over the past 30 days, the Zacks Consensus Estimate for Baidu has remained unchanged, while that for Alibaba's current-year earnings per share (EPS) has decreased, as you can see contrast in growth rates is notable — for the current year, the analysts expect BIDU's revenues to rise 2.2% to $18.9 billion and EPS to decline 4.3% to $10.08. BABA is expected to witness its revenue grow 3.8% to $143.4 billion and EPS grow 17.9% to $10.62. Alibaba's growth momentum and profitability heading into 2025 look solid, giving it plenty of financial firepower to continue investing in AI and other growth areas. This justifies its premium valuation. For Baidu Stock Image Source: Zacks Investment Research For Alibaba Stock Image Source: Zacks Investment Research Both Baidu and Alibaba stocks currently carry a Zacks Rank #3 (Hold). Both Baidu and Alibaba are positioning themselves as leaders in the rapidly expanding AI space, but they do so in different ways. Baidu's focus on autonomous driving and AI-powered cloud services is a bold, high-risk, high-reward strategy. Its valuation is attractive, especially considering the long-term potential of its AI and autonomous driving businesses. However, the company is more dependent on regulatory outcomes in China, which adds some volatility to its prospects. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks the other hand, Alibaba benefits from a diversified business model that includes e-commerce, logistics, and cloud computing, giving it multiple revenue streams that can support AI investment initiatives. While Alibaba's AI investments are not as bold as Baidu's autonomous driving ventures, its integrated approach in e-commerce and logistics gives it a more secure foundation for growth. The company's international exposure also provides an edge, particularly in a growing market like Southeast Asia. In conclusion, both stocks have strong AI-driven growth stories, but the edge goes to Alibaba for its diversified business model, consistent revenue generation from e-commerce, and international growth opportunities. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Baidu, Inc. (BIDU) : Free Stock Analysis Report Tencent Holding Ltd. (TCEHY) : Free Stock Analysis Report Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
21-04-2025
- Business
- Mint
DeepSeek's AI surprised the world. China's universities are the talent source.
In the global contest for artificial intelligence supremacy, the U.S. and China are often portrayed as the primary contenders. While the U.S. maintains a lead in AI innovation, China is rapidly closing the gap, driven by a surge in research output, substantial investments, and strategic governmental policies. 'It is not surprising that China now competes closely with the U.S. for leadership in AI talent. It trains by far a larger number of engineers and computer scientists than the U.S., although the U.S. still has an edge in attracting the best global talent, including from China," said Victor Shih, director of the 21st Century China Center at the University of California, San Diego. 'For now, the capital market for start-ups in the U.S. still functions much better than in China, but if the current turmoil turns into a prolonged recession, that advantage will be eroded," he told Barron's. China leads globally in the number of AI-related publications and patents, according to Stanford University's 2025 AI Index. This great leap is bolstered by significant government support and a strategic vision aiming for tech self-sufficiency. A pivotal moment in China's AI trajectory was the emergence of DeepSeek's R1 model, which rivals top U.S. models despite limited access to advanced computing resources—particularly semiconductor chips—due to U.S. export restrictions. DeepSeek's success intensified domestic competition—tech giants in China and start-ups tied to China's elite universities are vying for dominance in the sector. The landscape is characterized by fierce competition among established tech conglomerates—often referred to as the 'BAT" trio: Baidu, Alibaba Group Holding, and Tencent Holding—and a new wave of dynamic start-ups. Companies like Zhipu AI, MiniMax, and Moonshot AI have rapidly gained prominence, earning the nickname 'AI Tigers" from investors. These start-ups aren't only innovating at breakneck speed but are also attracting substantial investments, signaling a robust and competitive ecosystem. Tencent, for instance, has upgraded its Hunyuan T1 model to compete with DeepSeek and Alibaba. Baidu has launched new models, ERNIE 4.5 and ERNIE X1, which it plans to integrate into China's most popular search engine. This internal competition is further amplified by the open-source approach adopted by many Chinese firms. While open-sourcing AI models fosters collaboration and accelerates innovation, it also raises questions about revenue generation and potential exploitation by international competitors. Chinese universities have become pivotal to the nation's AI advancement, significantly contributing to research output and talent cultivation. Recent data place Peking University, Tsinghua University, and Zhejiang University at the top of the charts in AI research publications. Notably, Peking University has topped global lists of institutions ranked by AI research output since 2022, according to AIRankings. Peking University's AI institute said it referred requests for comment to professors, though none replied. Tsinghua University and Zhejiang University didn't respond to requests for comment. The success of AI start-ups like DeepSeek can be attributed, in part, to the robust talent pool emerging from these universities. DeepSeek's founder, Liang Wenfeng, is a graduate of Zhejiang University, and the company's team comprises young scientists, many of whom are fresh graduates from institutions such as Tsinghua and Peking University. This collaboration between academia and industry facilitates a seamless transition from cutting-edge research to real-world AI applications. 'When I was at Beida [Peking University], AI students were leaving or finishing their coursework to start companies—you'd hear about something new like every week," said James Liu, who is now pursuing a doctorate at MIT after receiving his bachelor's degree in China. Despite these advancements, China's AI sector faces significant challenges. U.S. export restrictions have limited China's ability to procure high-end AI chips, compelling domestic companies to seek alternatives and innovate with available resources. This constraint has spurred efforts to develop indigenous chip-making capabilities, but achieving parity with global leaders remains formidable. Moreover, the intense domestic competition necessitates strategic collaborations and a focus on niche areas to differentiate offerings. Companies are increasingly forming partnerships, both domestically and internationally, to leverage complementary strengths and navigate the complex AI landscape. Zhu Songchun—arguably the most renowned figure in the Chinese AI world—returned to China from the University of California, Los Angeles, in 2020 to head Peking University's Institute for Artificial Intelligence and its School of Intelligence Science and Technology. At a recent conference in Beijing, his keynote address summarized the zeitgeist. 'Creating world-class technology through Chinese thinking is our goal and our responsibility," he said. 'China is fully capable of taking the initiative in the era of general AI." Write to editors@
Yahoo
24-03-2025
- Business
- Yahoo
Palantir (PLTR) Impresses with AI Growth, But Analysts Warn of Overvaluation
We recently published a list of . In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against other high-flying AI stocks to watch today. The most important conference in the tech world is in full swing, yet investors are skeptical about what's ahead. According to Jensen Huang, his company is well-positioned to navigate a shift in the artificial intelligence industry, particularly where businesses are moving from training AI models to getting detailed answers from them. Huang also defended his company's lead in selling costly AI chips to customers, an aspect that was recently questioned after China's DeepSeek created a competitive chatbot with relatively fewer chips. READ ALSO: and Despite Huang's reassuring remarks, the chipmaker's stock fell more than 3%, reflecting how investors haven't been entirely assured by Huang's presentation. Calling the conference the 'Superbowl of AI', Huang commented that 'almost the entire world got it wrong,' regarding DeepSeek. 'The amount of computation we need as a result of agentic AI, as a result of reasoning, is easily 100 times more than we thought we needed this time last year.' At the same time, new AI models and tools are being launched in the tech world as businesses and countries compete in an attempt to lead the AI arms race. In the latest news, tech giant Tencent has unveiled a suite of new artificial intelligence tools capable of converting text and images into 3D visuals. The move marks the growing Chinese momentum in the field of generative AI. Similarly, Baidu has released two new AI models which are freely available to individual users ahead of schedule. ERNIE 4.5 is a native multimodal foundation model, while ERNIE X1 is a reasoning model with deep-learning capabilities. The company aims to increase user involvement across its platforms, attempting to combine these models into its larger ecosystem. As major players continue to release new models and tools, the race to dominate the AI landscape intensifies even further. It's worth waiting to see who eventually ends up leading the AI arms race and how these technologies end up making an impact on the business world and society. For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A software engineer manipulating a vast network of code on virtual Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. One of the most notable analyst calls on Tuesday, March 18, was for Palantir Technologies. Jefferies reiterated the stock as 'Underperform' with a $60 price target. The firm said that it is sticking with its underperform rating. The rating reflects how analysts from the firm returned from Palantir's AI Platform customer event 'impressed'. The return on investment case studies demonstrates how Palantir's products are helping transform businesses. Nevertheless, the positive momentum is 'baked' into Palantir's valuation. 'This positive momentum is baked into PLTR's valuation at 45x CY26E, the most expensive stock in our coverage. Fundamentals have been strong, but valuation remains the biggest concern and insiders continue to sell with co-founder Stephen Cohen selling another $310M in shares over the past few days.' Overall, PLTR ranks 9th on our list of high-flying AI stocks to watch today. While we acknowledge the potential of PLTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
23-03-2025
- Business
- Yahoo
Amazon.com (AMZN) Undercuts NVIDIA with AI Chip Discounts, JPMorgan Remains Bullish
We recently published a list of . In this article, we are going to take a look at where Inc. (NASDAQ:AMZN) stands against other high-flying AI stocks to watch today. The most important conference in the tech world is in full swing, yet investors are skeptical about what's ahead. According to Jensen Huang, his company is well-positioned to navigate a shift in the artificial intelligence industry, particularly where businesses are moving from training AI models to getting detailed answers from them. Huang also defended his company's lead in selling costly AI chips to customers, an aspect that was recently questioned after China's DeepSeek created a competitive chatbot with relatively fewer chips. READ ALSO: and Despite Huang's reassuring remarks, the chipmaker's stock fell more than 3%, reflecting how investors haven't been entirely assured by Huang's presentation. Calling the conference the 'Superbowl of AI', Huang commented that 'almost the entire world got it wrong,' regarding DeepSeek. 'The amount of computation we need as a result of agentic AI, as a result of reasoning, is easily 100 times more than we thought we needed this time last year.' At the same time, new AI models and tools are being launched in the tech world as businesses and countries compete in an attempt to lead the AI arms race. In the latest news, tech giant Tencent has unveiled a suite of new artificial intelligence tools capable of converting text and images into 3D visuals. The move marks the growing Chinese momentum in the field of generative AI. Similarly, Baidu has released two new AI models which are freely available to individual users ahead of schedule. ERNIE 4.5 is a native multimodal foundation model, while ERNIE X1 is a reasoning model with deep-learning capabilities. The company aims to increase user involvement across its platforms, attempting to combine these models into its larger ecosystem. As major players continue to release new models and tools, the race to dominate the AI landscape intensifies even further. It's worth waiting to see who eventually ends up leading the AI arms race and how these technologies end up making an impact on the business world and society. For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A customer entering an internet retail store, illustrating the convenience of online Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On March 18, JPMorgan reiterated the stock as 'Overweight' and said Amazon remains a top idea. 'We believe AMZN should gain retail share in a recessionary environment given low prices, wide selection, fast delivery, & stronger growth in non-discretionary items.' This development coincides with a recent analysis by Kevin McLaughlin and Anissa Gardizy from The Information. Their report claims that Amazon (AMZN) is undercutting Nvidia with aggressive AI chip discounts. AWS is reportedly offering server rentals powered by their Trainium chip which offers computing capabilities similar to Nvidia's H100 semiconductor. However, Amazon's chip comes at only 25% of the price. The move aims to draw tech giants, including Apple, who are experimenting with the latest version of the Trainium chip as an alternative to Nvidia's offerings, underscoring Amazon's strategic focus on AI. Overall, AMZN ranks 1st on our list of high-flying AI stocks to watch today. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
22-03-2025
- Business
- Yahoo
Apple (AAPL) Poised for AI Boom Without Heavy GPU Investments, Says Evercore
We recently published a list of . In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other high-flying AI stocks to watch today. The most important conference in the tech world is in full swing, yet investors are skeptical about what's ahead. According to Jensen Huang, his company is well-positioned to navigate a shift in the artificial intelligence industry, particularly where businesses are moving from training AI models to getting detailed answers from them. Huang also defended his company's lead in selling costly AI chips to customers, an aspect that was recently questioned after China's DeepSeek created a competitive chatbot with relatively fewer chips. READ ALSO: and Despite Huang's reassuring remarks, the chipmaker's stock fell more than 3%, reflecting how investors haven't been entirely assured by Huang's presentation. Calling the conference the 'Superbowl of AI', Huang commented that 'almost the entire world got it wrong,' regarding DeepSeek. 'The amount of computation we need as a result of agentic AI, as a result of reasoning, is easily 100 times more than we thought we needed this time last year.' At the same time, new AI models and tools are being launched in the tech world as businesses and countries compete in an attempt to lead the AI arms race. In the latest news, tech giant Tencent has unveiled a suite of new artificial intelligence tools capable of converting text and images into 3D visuals. The move marks the growing Chinese momentum in the field of generative AI. Similarly, Baidu has released two new AI models which are freely available to individual users ahead of schedule. ERNIE 4.5 is a native multimodal foundation model, while ERNIE X1 is a reasoning model with deep-learning capabilities. The company aims to increase user involvement across its platforms, attempting to combine these models into its larger ecosystem. As major players continue to release new models and tools, the race to dominate the AI landscape intensifies even further. It's worth waiting to see who eventually ends up leading the AI arms race and how these technologies end up making an impact on the business world and society. For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A wide view of an Apple store, showing the range of products the company Inc. (NASDAQ:AAPL) is a technology company. One of the most notable analyst calls on Tuesday, March 18, was for Apple Inc. Evercore ISI reiterated the stock as 'Outperform' and raised its price target on the stock to $275 per share from $260. According to the analysts, Apple is positioned to remain a 'tech staple' and obtain the benefits of the artificial intelligence boom. It also has the potential to boost gross margins through product mix, pricing strategies, as well as the impact of stock buybacks. The firm further said that Apple is poised to capitalize on artificial intelligence (AI) monetization without the need to invest heavily in graphics processing units (GPUs). 'AAPL remains positioned to sustain mid-single digit sales and low/mid-teens FCF & EPS growth over next several years with less volatility & high consistency.' Overall, AAPL ranks 5th on our list of high-flying AI stocks to watch today. While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey.
