Cathie Wood, the founder and CEO of ARK Invest, made a significant move on Wednesday by adding to her position in Baidu (NASDAQ: BIDU) for the first time in nearly four months. This purchase comes as the iconic growth investor capitalizes on Baidu’s recent stock rebound—soaring 53% over the past month—and aligns with a series of analyst upgrades.
Despite closing down 1.87% on the day of Wood’s purchase, Baidu continues to attract bullish attention.
Baidu is emerging as a potential beneficiary of U.S.-China AI chip restrictions. Although the company recently posted a 4% year-over-year revenue decline and a 35% plunge in adjusted earnings for Q2, new Chinese import controls on Nvidia’s H20 and RTX Pro 6000D chips are creating opportunities for domestic AI chip producers. Baidu’s Kunlun AI chip unit—backed by over 5,700 AI patent applications, the most in China—is viewed by analysts as a major contender in this shifting landscape.
Wall Street is swiftly recalibrating its outlook on Baidu. On Tuesday, Arete Research upgraded the stock two notches from Sell to Buy, setting a $143 price target. A day later, Jefferies analyst Thomas Chong raised his target from $108 to $157, citing a “golden opportunity” for Baidu’s AI chips amid supply constraints. The stock now sits just 4% below Arete’s target.
Even after the recent surge, Baidu shares remain historically undervalued—trading at a forward P/E ratio of less than 13, well below industry averages. Analysts expect earnings to return to growth in 2026, and project that by 2028, the P/E ratio could drop to just 9 based on forecasted profits. While online search—which still accounts for over 60% of core revenue—remains sluggish, Baidu’s AI cloud business posted impressive 34% year-on-year growth last quarter.
Wood’s investment is widely seen as a wager on Baidu’s strategic positioning in China’s push for AI self-reliance. With the country’s largest search engine generating steady cash flow and its Kunlun chips gaining traction, Baidu is attempting to pivot toward a hardware-enabled AI future. Challenges remain, however: its iQIYI streaming service continues to underperform, online advertising growth is weak, and AI chip margins trail those of its legacy search business.
Market observers suggest the stock’s rally reflects a broader reappraisal of Chinesedomestic substitutes as “de-Nvidiazation” takes hold. Whether Baidu can convert its technical expertise into sustainable market share will determine if this surge is a short-term reaction or the beginning of genuine long-term value creation.
