By George Glover
Baidu stock faces more pain amid China's faltering economy -- and the Beijing-based search-engine provider might also find it tough to make money out of artificial intelligence, according to Susquehanna International Group.
Analyst Shyam Patil downgraded the stock to Neutral from Positive and cut his price target for shares to $85 from $105 in a research note published Monday. Baidu's American depositary receipts (ADRs) traded at $80.33 as of Friday's close, meaning he now believes they can only rise about 6%.
Patil said "macro-related pressures and AI search monetization headwinds" are likely to weigh on Baidu's revenue.
Chinese tech stocks have slumped this year as Beijing struggles to reboot the world's second-largest economy, with growth and consumer spending faltering. But there is also the question of whether Baidu will be able to turn a profit out of AI -- Patil noted that queries its search engine answers using generative AI are currently monetizing at a lower rate than traditional search, given the new tech doesn't always funnel users through to ads.
Baidu ADRs have tumbled 33% this year, compared with a 12% rise for Hong Kong's Hang Seng Index. They fell last week after a quarterly earnings report showed the company's advertising sales were falling.
Write to George Glover at george.glover@dowjones.com
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(END) Dow Jones Newswires
November 25, 2024 08:12 ET (13:12 GMT)
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