Apple and Baidu Reportedly Discussing AI Partnership to Bring Baidu's Gen AI to iPhones in China
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Apple is reportedly in talks with Baidu to leverage its Gen AI platform Ernie for iPhones in China, providing access to Baidu's technology for millions of iPhone users.
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Baidu's Gen AI revenue was around RMB250-280 million in Q4 2022, but the CEO expects it to multiply to several billion RMB in 2024 as monetization ramps up.
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Baidu has strong growth prospects in AI but is retaining cash rather than distributing it to shareholders, perhaps to remain agile amid competitive and regulatory uncertainty.
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The author estimates Baidu's total revenue to grow 7% YoY in 2024, supported by cloud and a macro recovery, with adjusted net income flat at RMB29 billion.
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Despite healthy business momentum, Baidu trades at an inexpensive ~7x EV/EBIT, leading the author to reiterate his $179 price target and "Buy" rating.