China internet and search giant Baidu Inc (ADR) (NASDAQ:BIDU) has been a big winner over the past several years thanks to growing internet usage in its core Asian markets.

The narrative sending BIDU stock higher is pretty simple. There are tons of consumers in China. Those consumers are finally starting to urbanize and digitize.

A big part of this digitization narrative is a boom in Chinese internet usage. Search is at the core of the internet. Baidu is China’s search engine. Therefore, Baidu is at the core of China’s internet, so as the China internet growth narrative has exploded higher, so has BIDU stock.

But this narrative misses a critical growth catalyst: smart home.

That catalyst could send BIDU stock considerably higher over the next several years. Here’s why.

The Smart-Home Market Is a Giant Opportunity

The smart-home revolution has hit the U.S., and it’s coming for China next. Here are the numbers.

There are roughly 130 million households in the United States. About 39 million Americans own a smart speaker. Assuming each household only has one smart speaker, then you’re looking at a smart speaker penetration rate of about 30% in the United States.

And that is just smart speakers.

Roughly 70 million U.S. households have a connected TV device like a Google Chromecast, Roku, Apple TV or smart TV (between 50% and 60% penetration). Then there are smart appliances, smart lights, smart security systems, smart cleaning devices and much more.

All together, more than 40% of Americans have adopted at least some form of smart-home technology. And the average smart-home tech adopter has more than three devices in their home.

Moreover, the smart-home technology market in the U.S. is only growing. Global smart speaker sales are expected to grow by 70% this year, with a majority of that growth coming from the U.S.

So, when we talk about the China consumerism and digitization narratives, the smart-home revolution is a major part of that discussion. Just as China has followed in America’s footsteps when it comes to e-commerce, social media, smartphones and internet usage, China will likewise follow in America’s footsteps when it comes to smart-home technology.

Currently, only about 4 million Chinese households have a smart speaker. There are over 450 million households in China. That means the penetration rate is less than 1%.

The penetration rate won’t remain that low for long. A recent survey from PwC found that Chinese consumers are twice as likely to buy an AI-enabled device than American consumers. Meanwhile, BIDU has reported that its smart-home ecosystem is seeing its install base grow by nearly 150% month over month and its monthly active device count grow by nearly 130% month over month.

All together, thanks to huge and growing consumer interest and a massive addressable market, it’s easy to see why the Asian smart-home market is expected to hit $115 billion by 2030.

Baidu Could Be a Big Winner

Baidu is at the center of this smart-home revolution. Its peers JD.Com Inc (ADR) (NASDAQ:JD) and Alibaba Group Holding Ltd (NYSE:BABA) have dipped their toes into China’s smart-home market, but Baidu is still the leader.

The company has unveiled multiple smart speakers powered on its DuerOS AI. It’s also behind what is widely considered to be the sleekest-looking smart-home device in the world, the Raven H. Moreover, Baidu has its hands in much more than just speakers. The company recently invested $160 million for an 11% stake in a Chinese smart TV company.

Overall, all signs point to BIDU being a huge player in the burgeoning Asia smart-home market. Even if the company grabs just 20% market share (similar to what Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) has grabbed in the U.S.), then that would equate to more than $20 billion in annual revenues by 2030 (assuming a market size of $115 billion).

BIDU’s revenues this year are expected to be under $16 billion. Thus, a $20-billion-plus revenue opportunity by 2020 is much more than just small peanuts.

Bottom Line on BIDU Stock

BIDU stock is a big growth stock (15-20% revenue growth projected for next several years) trading at a reasonable valuation (22.5 times 2019 earnings estimates) with a big growth catalyst from smart home that doesn’t seem priced into shares.

All in all, this is a name you want to own for the next several years. It’s a pure play on the booming China consumerism narrative, which remains in its early innings considering China’s annual per capita consumption (roughly $3,600) remains well below America’s per capita consumption (nearly $23,000).

Due in large part to this still-huge discrepancy, BIDU stock should head higher over the long term.

As of this writing, Luke Lango was long BIDU, JD, BABA and GOOGL.