- Baidu impressed during their latest earnings report.
- Baidu has the ambition to launch an autonomous car in 2 years.
- Being the first to launch would be a game-changing move for the giant from the East.
As the race for autonomous car supremacy heats up, Chinese tech giant, Baidu Inc. (ADR) (NASDAQ:BIDU), is set to be the first to launch commercially, with reports pegging the launch as early as in 2018.
Traditionally, Baidu is known as "Google of China's" and their commitments to becoming much more than just a search engine company exemplifies this. For instance, they recently announced a partnership with Amazon to become the official search engine for their products released in China. It is worth noting that Amazon is keen to establish more of a presence in Asia. Therefore, Baidu would be able to ride this wave and grow. This and other factors make Baidu worth adding to your portfolio.
Moreover, Baidu posted impressive results during their last earnings report. Net income shot up by 155% as compared to 2014. The market responded by rewarding Baidu stock with a 10% rise in the period following the report.
Autonomous Car Ambitions
If investors think that Baidu is currently riding a wave of growth, imagine the consequences of being the first to release a self-driving car. With slowing smartphone sales, and an arguable plateau in innovation, tech companies are looking for their next growth driver.
Developments in robotics and satellite navigation mean that a self-driving car is just around the corner. Consequently, there is currently a "fight" between top companies such as Google, Tesla and Baidu to release such a vehicle first. Interestingly, Tesla has already given us a glimpse of what this could look like with the autopilot feature in the recently announced Tesla Model 3. Owners will be able to use the autopilot feature to make the car automatically switch lanes, overtake and stop while on a highway. Interestingly, Tesla will be able to update the software of the car in order to add extra features. Unfortunately, turning and manoeuvres aren't currently possible.
Baidu hopes to begin selling its autonomous vehicles by 2018. Investors view this as incredibly ambitious due to the fact that there are so many legal loopholes, safety concerns and tests which need to be carried out first. One thing is clear: if Baidu is able to release an autonomous car first, not only will it be a huge growth driver, and boost their brand in the West, but it would also boost Baidu stock price significantly. The tech industry is hungry for the next big thing, and at the moment, there is none bigger than the dream of a car which drives itself.
Baidu's aspirations of an autonomous car launch 2 years from now would be laughable if not for the fact that they have a team capable of producing it. They "poached" robotic automation expert, Andrew Ng, from Alphabet in 2014. In a smart move, Andrew was able to remain in California and use the formidable engineering talent available to potentially herald the next generation of automotive vehicles. All of this is coming in the midst of a strong Q4 2015 results which saw Baidu reporting an impressive $3.8 billion in profit. This was partly due to a 21% increase in mobile searches on their search engine.
Baidu stands at the precipice of a huge opportunity to build a long-term growth driver. The autonomous car opportunity would allow them to license the technology to vehicle manufacturers and generate new revenue segments. Moreover, there is a big opportunity to develop solutions for the defense and delivery industry. We are at the precipice of a huge shift in how people and goods move around.
It would be wise to add Baidu stock to your portfolio, if not just for their current developments, but also the fact that they are a company which is performing admirably and making significant headway in a highly competitive industry.