Baidu: Buy China-Induced Weakness
- Baidu continues to slump to multi-year lows.
- The Chinese company has growth opportunities outside internet search in voice assistants and self-driving cars, among others.
- The stock remains exceptionally cheap in the large-cap technology sector as margins rebound with the exit of transaction-related businesses.
The general weakness in Chinese tech stocks provides a substantial opportunity for a stock like Baidu (BIDU). The internet search leader in China has in-roads to new technologies and the Chinese economy is still transitioning online while the economy is growing at one of the fastest rates in the world. My investment research continues to support buying weakness in the stock, especially on irrational fears related to Google (GOOG, GOOGL) entering the Chinese internet search market.
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Google CEO Pichai announced that the company has no intent of entering the Chinese search market. Baidu isn't down due solely to the Google threats, but a large part of the decline is based on this issue.
Baidu is actually down about 1% to $177 here. The market isn't paying attention because the only real long-term risk is Google. The stock is now down over $100 from the highs back in May.
Disclosure: Long BIDU. Please review the disclaimer page for more details.