BIDU - Baidu & AI City of Dreams

I am really high on BIDU as the leader in search in the largest country on the planet with a heavy mobile-using population. Plus they have their AI play, which also has a focus on Autonomous cars and are an early partner with NVIDIA in this space:…

Article below and excerpts are interesting…essentially China setting aside this land to test out future tech, such as autonomous cars. Baidu already was announced at having received the first permits in China for live tests.

On top of all that, they just spun out their Netflix unit, called iQiyi as an IPO in the last week or so. Baidu still is majority owner and controls all voting rights. I am hopeful that iQiyi grows and there is a bit of a Yahoo/Alibaba type effect where BIDU stock also benefits from the stake in iQiyi without having to have the high operating costs of that unit in BIDU’s ERs moving forward.…

This engagement by government to fast track the AI technology of Baidu shows the potential and also helps to fast track the development, providing a competitive advantage against competitors. Baidu is positioned to become one of the world’s leaders in autonomous vehicle technology. They operate in the largest auto market in the world, have a government-backed project, and are leading the charge with their Apollo program.

Xiongan New Area - Smart City
Xiongan New Area sits ~100km to the west of Tianjin and ~100km to the south of the capital city, Beijing. The goal of the project is to construct, from scratch, an environmentally friendly city to relieve overcrowding. Currently, the zone is 100 sq km, but this is planned to expand to 2,000 sq km and house upwards of 2.5 million people. The city is planning on having new AI tech in transportation, education, healthcare, payments, and environmental protection.

As an initiative, the government has decided to use the zone as a “testing ground” of sorts for AI technology in the hopes of creating a model smart city. This is where Baidu comes into play. The company’s “Apollo” program, their autonomous vehicle unit, has been signed to power the new cities vehicle infrastructure. This would include street cleaners and public bus transportation. It is important to understand that the Apollo project represents the underlying AI technology, and not the car itself.

Baidu has two operating segments, Baidu Core and iQiyi. This should change next year as iQiyi (IQ) IPO’d last week. Baidu’s autonomous driving unit is grouped within the Core segment along with about 15 other projects. Because of this the specific numbers for Apollo are blurry. What we do know is that the company is going to invest in 100 self-driving vehicles by 2020. Baidu pumps ~$1.5 billion into R&D per year towards AI technology. In fact, the Chinese government has put laws in place that will require at least 50% of cars sold by 2020 must have some autonomous features.