UBS turning more positive on Baidu, following Ernie Bot announcement

By Sam Boughedda 

UBS analysts maintained a Buy rating and $185 price target on Baidu (NASDAQ:) in a note to clients on Monday, providing a positive assessment of the company’s ChatGPT equivalent product, Ernie Bot.

Baidu hosted a press conference on March 16, unveiling Ernie Bot, emphasizing its domestic leadership in AI technologies, and showcasing some product capabilities via pre-recorded demonstrations, the analysts explained.

“Baidu is opening up Ernie Bot for testing and inviting the public and business users, though the timeline for a full launch is not clear. Initial market reaction post the event was negative given the lack of a live demo and uncertainties around product plans, but the ADR performed better overnight,” they said.

“In contrast, we view the product launch as a positive for Baidu, which is the first China internet company to release a product, and we believe interactions and feedback from users post-launch could strengthen Baidu’s first mover advantage,” they added.

Following the March 16 press conference, UBS has turned more positive on BIDU.

“Baidu’s share price is below when Ernie Bot was first announced. We believe the market is pricing Baidu’s core ads business at 6x 2023E earnings (and its cash and major investments), but giving little to no value to its cloud and car businesses or its generative AI potential,” the analysts concluded.