Baidu Inc ADR (BIDU)

Baidu Inc, ADR (BIDU) stock dropped by 7.00% due to growing concerns related to China's military involvement with large language models (LLMs). The connection between the military and commercial LLMs has raised eyebrows within the investor community.

• Military's Utilization of AI in Strategic Support Force: Reports from the South China Post suggest that the People's Liberation Army's Strategic Support Force has been actively employing military AI, particularly large language models, to address the challenges posed by unpredictable adversaries. This revelation has caused apprehension in the market, contributing to the decline in BIDU stock.
• Integration of Baidu's Ernir Chatbot with Military AI: One notable aspect of this development is the integration of Baidu's Ernir chatbot with the military's internal AI system. This integration allows the military AI to leverage sensor data collected from the frontline. Subsequently, the AI system sends this data to commercial LLMs for analysis, generating prompts to enhance data comprehension and perform specific tasks. Remarkably, this entire process operates autonomously without human intervention. These revelations have sparked concerns among investors and market participants, leading to a notable decrease in Baidu Inc, ADR (BIDU) stock prices. The implications of such military involvement with advanced AI technologies are yet to be fully understood, and they continue to influence the company's stock performance.

Baidu Inc. Stock (BIDU) dropped by 5.97% from $114.71 to $107.86 in the trading on Thursday October 19, 2023. The reason why BIDU stock down today is due to a pair of price-target cuts from analysts, lower estimates on potential impact on ads, cloud revenues.

• J.P. Morgan maintained its Overweight rating on Baidu (BIDU) but cut the price target on the stock to $185 from $200, noting near-term downside risk to the share price as they think weak demand in China's e-commerce sector in Q3'23 could lead to estimate cuts prior to the Q3 results. In addition, they believe ads demand from franchise activities has declined due to current macro conditions.
• Goldman Sachs analyst, Lincoln Kong, reduced his level to $181 per share from his previous target of $197, while maintained his buy recommendation on the big tech company.
• ** HSBC** analyst Charlene Liu, who has a Buy rating on Baidu (BIDU), also cut the price target on the stock to $160 from $168. The analyst expect reduced revenue from smart transportation as government budget cuts could dampen Baidu's cloud revenue growth.
• Citi analyst Alicia Yap, having buy rating on Baidu, also reduced revenue and net profit estimates, citing slower recovery of ad sentiment from small- and medium-sized enterprises, and smart transportation project delays.