Driverless Technology Could Be Huge for Baidu Stock
International technological landscape gets loftier, as China’s search giant Baidu, Inc. (NASDAQ:BIDU) gears up to beat America’s Alphabet Inc (NASDAQ:GOOG), formerly Google. BIDU stock’s year-to-date performance has been relatively flat, but the latest move could prove a growth driver in 2016.
Top Chinese search engine and Internet services company Baidu reported a breakthrough in its driverless car technology, as the company successfully managed to take a modified self-driving 3-series BMW on a 30-kilometer driverless test drive through the busy roads of Beijing. Baidu was able to complete the practical tests on mixed roads under various environmental conditions. (Source: “Baidu Autonomous Car Reaches Milestone in Beijing,” Yahoo! Finance, December 10, 2015.)
Baidu’s move is an attempt to tackle Alphabet Inc in the international arena, as the latter prepares to commercialize its driverless technology. Following in Alphabet’s footsteps, Baidu is the first in China to have successfully tested a self-driving car, making it a groundbreaking achievement in the country.
Although Google is far ahead in the said technology, with its cars already driving on the roads of California and Texas, Baidu’s achievement is unprecedented in China. Baidu may still have a long way to go, but the company is right on track to achieving the goal in much lesser time than Google.
In the world’s largest and most populous country, road accidents are inevitable. But a perfected self-driving car will definitely be able to cut down the risks. The technology will particularly find utility in cases where drivers are older or visually impaired.
Google has already proved the naysayers, who thought the technology wasn’t viable, wrong. In fact, the self-driving technology has also sparked the interest of companies like Apple and Tesla, who are likewise working on their own self-driving cars.
Even if Baidu doesn’t directly sell cars, it will still be able to sell the technology worldwide—just like Alphabet provides its Android OS to mobile hardware vendors around the world, building an ecosystem for its own platform.
This particular technology is still in its nascent phase and if perfected, it will prove to be a huge revenue-driver for the first-mover in this steadily growing niche. Baidu stands to win from being the first to offer it in China.
As the industry dynamics continue to shift, the line between technology and Internet services is blurring. In the U.S., giants like Alphabet, Amazon.com, Inc., and Facebook, Inc. have moved from their core Internet services business to technology software and hardware. Baidu’s move mirrors this trend.
The Internet company is not only investing in hardware technology, but it is also strengthening its position in online-to-offline (O2O) commerce. The company has been investing in offline services companies like ride-sharing service Uber and travel e-commerce web site Ctrip. The company has also recently partnered with CITIC Bank to start offering Internet banking services. Baidu has effectively spread its tentacles far and beyond its core search engine business.
The Bottom Line on BIDU Stock
Baidu is one of the biggest Internet services companies in China, second only to Alibaba. The company is well positioned locally in the Internet services and technology industries and is also likely to spread its wings internationally. Despite a sluggish performance this year, all of its latest moves will prove a boon for Baidu stock in the coming year.
Long story short, BIDU stock is a strong growth play for the long run, as the company continues to strengthen its stronghold in the fastest-growing online market of China.