Sometimes, you have to expand your geographic horizons to find the best deals in the financial markets. A case in point is Baidu (NASDAQ:BIDU) shares, which are trading at a discount right now. Don’t expect Baidu stock to be underpriced for much longer, though, as the company could soon strike a deal with a famous smartphone manufacturer.
Based in China, Baidu is a search-engine market dominator that also specializes in artificial intelligence technology. You might not know this, but Baidu also launched the first 24/7 robo-taxi service in China. It’s a fascinating company that’s not a darling on Wall Street – but that’s exactly why value seekers should be in a mood to buy BIDU stock now.
Baidu Stock Is Cheap Despite the Company’s Revenue Growth
How cheap is Baidu stock now? It’s been as high as $150 multiple times during the past several years, but recently only traded at around $105.
During a time when the U.S. market is hyper-focused on the “Magnificent Seven,” Baidu is an undervalued business. Baidu’s GAAP trailing 12-month price-to-earnings ratio is 13.51x, versus the sector median P/E ratio of 19.52x.
Baidu, like the “Mag-7” companies, is heavily involved in AI technology. Baidu isn’t in financial trouble. You might think the company is in bad shape, based on the share-price action. However, Baidu’s fourth-quarter fiscal 2024 revenue actually grew 6% year over year to 34,951 RMB.
In addition, Baidu’s full-year 2023 revenue increased 9% YOY to 134.6 billion RMB. Remember, investors shouldn’t try to compare Baidu’s revenue growth to that of U.S.-based Magnificent Seven companies.
China’s economy, without a doubt, has faced significant challenges and this makes Baidu’s sales growth all the more impressive.
Baidu Could Soon Have an Agreement With Apple
Another pillar of the bull case for Baidu stock is the company’s potential agreement with well-known smartphone manufacturer Apple (NASDAQ:AAPL). If you’re still on the fence, this news item ought to convince you to invest in Baidu while the company is still undervalued.
Here’s the scoop. According to The Wall Street Journal, Apple “held preliminary talks with” Baidu about the possibility of using Baidu’s generative-AI technology in Apple’s devices in China.
This team up, if it happens, would benefit both companies. Apple’s AI-enhanced devices would be more likely to satisfy China-based regulators’ inspections and requirements. As for Baidu, the company would have a powerful, capital-rich and globally recognized partner.
Baidu Stock: This Sounds Like the Deal of a Lifetime
Could this be the best tech-sector deal of 2024? No, I’m not talking about the potential deal between Baidu and Apple, though that would certainly be monumental if it happens.
Rather, I’m referring to the unbeatable deal you can get right now with Baidu stock. The shares are reasonably valued, and Baidu recently demonstrated solid revenue growth. Hence, I encourage you to think globally and, before the opportunity passes you by, put some Baidu shares in your portfolio.
On the date of publication, David Moadel did not have (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 InvestorPlace.com Publishing Guidelines.
