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Tue, June 6 at 7:00PM ET

BlackRock Is Betting Big on Baidu (BIDU) Stock. Here’s Why.

  • BlackRock (BLK) owned 150.33 million shares of Baidu (BIDU) as of Dec. 31.
  • That compares to just 1.6 million shares as of the end of Q3.
  • BIDU stock is up by over 18% year-to-date.
BIDU stock - BlackRock Is Betting Big on Baidu (BIDU) Stock. Here’s Why.

Source: monticello /

All eyes have been on Baidu (NASDAQ:BIDU) stock following the company’s announcement that it would create an artificial intelligence (AI) chatbot called Ernie bot. “Ernie” stands for “Enhanced Representation through Knowledge Integration.” Over the past few years, Baidu has spent billions of dollars on AI technology, which it will eventually incorporate into its search service. Internal testing of Ernie is expected to be conducted next month, followed by a public release.

Meanwhile, BIDU stock is trading in the mid-$100 range, a far cry from its peak of around $340 in February of 2021. Shares have also been a dud for the past five years, dishing out a loss of over 40%. In the past year, shares have fallen by over 10%.

However, major financial firm BlackRock (NYSE:BLK) may believe that the worst has passed. Let’s get into the details.

BlackRock Bets Big on BIDU Stock

According to a Schedule 13G filing, BlackRock owned 150.33 million shares of Baidu as of Dec. 31, which is equivalent to a 6.6% ownership stake. That’s up from just 1.6 million shares as of Q3, which means that BlackRock acquired 148.72 million shares in just a single quarter. Following the purchase, BIDU is now BlackRock’s 33rd largest 13F position, accounting for 0.46% of its portfolio.

This is a significant bet on a Chinese company that has struggled over the past few years, but still carries massive potential. In addition, 2023 could prove to be a comeback year for Chinese equities.

Bloomberg reports that short-term funds have been selling Chinese stocks ever since the Lunar New Year holidays. At the same time, long-term funds have been buying, although at a slow rate. On another note, Haitong Securities estimates that Chinese mutual fund inflows will reach $148 billion this year, more than double the amount last year. Chinese citizens hold an estimated 3 trillion yuan in excess savings, so some of that may go toward the market.

Still, with the good comes the bad. China’s government has been known for having strict regulatory oversight, and the recent trend of AI is raising some eyebrows. Earlier this week, the Shanghai Stock Exchange warned investors that some companies are “simply riding on concept without conducing actual businesses.” The exchange also highlighted risks for AI companies, such as difficulty scaling and the “industry iteration cycle.”

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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