Baidu‘s (BIDU) push into artificial intelligence accelerated with the purchase of Beijing-based startup Raven Tech and the creation of a new business unit to oversee its Duer digital assistant and related products.
Baidu, China’s internet search leader, views voice-activated, smart-home devices as core to its long-term strategy, much like Google-parent Alphabet (GOOGL) and Amazon.com (AMZN). Amazon has sold over 8 million Echo home-speaker systems.
Baidu says Raven Tech’s founder, Cheng Lu, will head its smart home device business. Baidu recently hired a former Microsoft (MSFT) executive, Qi Lu, to be chief operating officer as it pushes into AI and self-driving cars.
Raven Tech developed a Mandarin language-based AI voice assistant app.
IBD’S TAKE: While Baidu stock has been in the doldrums, other Chinese internet stocks such as Weibo, NetEase and Momo have been doing better. Learn more at IBD Stock Checkup.
Baidu’s AI investments have picked up amid tough times for the internet giant. Baidu’s revenue growth has stalled after the Chinese government cracked down on health care advertising following the death last year of a university student who reportedly underwent an experimental cancer treatment he’d found using the search engine.
U.S. shares of Baidu edged up 0.74% to 184.94 in the stock market today. Baidu stock is up 12% in 2017, but it’s been consolidating for about 10 months amid the tougher regulation of online ads.
Baidu reports earnings on Feb.23. Baidu lowered guidance in 2016 after the government issued new guidelines for online ads.
Analysts estimate that Q4 revenue will fall 2.2% to $2.66 billion, with EPS down 19% to 90 cents.
Some analysts say Baidu’s advertising revenue from news feeds in mobile apps could provide a lift. There’s speculation that Baidu could spin off its video streaming business, iQiyi.com.