HONG KONG (Reuters Breakingviews) – Concise insights on global finance in the Covid-19 era.
SLOW AND STEADY. China’s search engine operator Baidu is finally getting somewhere with its artificial intelligence bets. Sales in the quarter ending in December rose 5% year-on-year to $4.6 billion. That was powered by a 52% surge in cloud computing and other non-advertising revenue, which now comprise 14% of total revenue.
Boss Robin Li’s scattershot efforts to find new sources of growth are finally finding some momentum too, particularly in autonomous driving. Baidu already operates a fleet of robotaxis and buses in Guangzhou, and supplies self-driving software, maps, and infotainment systems to local carmakers. Last month, it unveiled a joint venture with Geely to make intelligent electric vehicles.
That’s all to the good, but shares are up 130% over the past year, trading at roughly 30 times forecast earnings, Refinitiv data shows, nearly double its two-year average. That looks premature. The company warns it could take 3 years to bring a vehicle to market. Investors risk putting the self-driving car before the profit horse. (By Robyn Mak)
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