5 Cheap AI Stocks to Buy in 2023

3. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 40

Upside Potential as of March 31: 21.1%

Average Analyst Price Estimate: $186.27

Baidu, Inc. (NASDAQ:BIDU) is a Chinese company specializing in internet-related services, products, and AI. It is planning on launching an AI-based chatbox in 2023.

Analysts at Loop Capital hold a Buy rating on Baidu, Inc. (NASDAQ:BIDU) shares as of March 28, alongside a price target of $215.

The search engine offered by Baidu, Inc. (NASDAQ:BIDU) holds a market share of 84% in the country. The stock was trading at a P/E ratio of 15 on March 22, which was 32% cheaper than its five-year average. Analysts on Wall Street hold an average price target of $186.27 on the shares, with a high forecast of $234.

Our hedge fund data shows 40 funds long Baidu, Inc. (NASDAQ:BIDU) in the fourth quarter. Their total stake value was $1.7 billion.

Horos Asset Management, an investment management firm, mentioned Baidu, Inc. (NASDAQ:BIDU) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“As I mentioned at the beginning of this quarterly letter, we took advantage of the meltdown in technology platforms to initiate new positions in companies in which we had already been shareholders in the past and whose valuation did not, until now, provide a sufficiently high margin of safety. Such is the case of PayPal and Baidu, Inc. (NASDAQ:BIDU).

In the case of Baidu, as many will know, it is known as the “Chinese Google”. The company has been the leading Internet search engine in the Asian country for years, which has given it a historically privileged position to monetize, through online advertising, a huge user base. However, the rise of two types of applications has called into question the sustainability of its business model. On the one hand, mobile social apps, such as ByteDance’s well-known TikTok, have emerged as a new model of online consumption, generating a new platform through which to monetize Internet users. On the other hand, even more disruptive in the long term, is the emergence of the so-called super apps: a sort of virtual Swiss Army knives that allow users to access many products and services without having to leave their interface at any time, making Baidu’s traditional search engine less attractive. In this field, Tencent (with its super app Weixin/WeChat), Alibaba (Alipay) and Meituan certainly stand out. These two factors have caused Baidu’s online advertising market share to drop from 17% in 2017 to less than 7% estimated for 2022.34 To this deterioration, we should add the collapse in market value of its stake in iQiyi (video platform controlled by Baidu) and its equity holdings such as Trip.com (hotel and flight platform) …” (Click here to read the full text)