Baidu stock price surged in Hong Kong on Wednesday, reaching its highest level since September 2023 as investors cheered its semiconductor investments and as Chinese technology companies soared. It is in its fourth consecutive week of gains and has jumped by almost 80% from the lowest level this year.
Baidu stock price jumps after analysts upgrade
Baidu, China’s answer to Google, has been in a strong bullish uptrend in the past few days after Arete Research cited the company’s upgrade of the stock from sell to buy, citing its chip business, which will offset its slowing advertising venture.
Other analysts, including those from Goldman Sachs, Roth, and Benchmark, have all maintained their bullish outlook for the stock.
The main bullish view for the company is its Kunlun business unit, which is building chips that could compete with the likes of AMD and Nvidia. In a recent announcement, the company said that the unit has secured a big order from China Mobile, which will use them to power its AI servers.
AI growth to offset the advertising business
Baidu hopes that its AI business will help to offset the advertising business, which has struggled as the Chinese economy slows.
Data released this week showed that China’s retail sales and industrial production retreated sharply in August. In most cases, this business is usually affected by the health of the Chinese economy because, unlike Google, Baidu is primarily a domestic company.
The most recent results showed that Baidu’s total revenue dropped by 4% to RMB 32.7 billion or $4.5 billion. Its operating income slowed by 45% to $457 million, while the adjusted EBITDA dropped by 29% to $906 million.
The results also showed that Baidu has made substantial progress in its autonomous vehicle industry, with its Apollo Go entering major deals with Uber and Lyft. These partnerships will see these American companies deploy these systems in key international markets. The CEO said:
“Apollo Go accelerated global expansion while actively exploring new business models, underscored by our leadership in both left-hand drive and right-hand drive robotaxi markets globally.”
Analysts expect that the weakness in the advertising business will continue in the coming months. The average estimate of 19 analysts is that the company’s revenue this quarter will be CNY 30.9 billion, a 7.7% drop from the same period last year.
Analysts see the annual revenue falling to CNY 129.79 billion, down by 2.50% from what it made last year. The company’s top initiatives are expected to start bearing fruit in 2026, with its revenue projected to increase to CNY 136.33 billion.
Meanwhile, the ongoing Baidu stock price surge has coincided with the performance of other Chinese technology companies. Tencent Holdings stock has jumped to H$660, up by over 82% from its YTD low.
Similarly, Alibaba stock soared to $162 up by 106% from its January lows. Other top companies like Xiaomi and PDD have also jumped lately, while optimism of the US deal on TikTok.
Baidu stock price analysis
The three-day timeframe chart shows that the Baidu share price bottomed at $75 earlier this year and then rebounded to nearly $135 today. It has just crossed the important resistance level at $120, its highest level in September.
The stock has jumped above the 50-day and 50-day Exponential Moving Averages (EMA) and is now nearing the overshoot point of the Murrey Math Lines.
Also, the stock has become highly overbought as the Relative Strength Index has jumped to 82 and the Stochastic Oscillator moved to nearly 100.
Therefore, while the uptrend will continue, there is a risk that it will drop and retest the key support at $120. Such a drop will be part of a break-and-retest pattern, which is a common continuation sign.
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