Baidu (BIDU, Financial) announced a collaboration with Uber (UBER) to expand its autonomous vehicle service, Robocar, beyond China to various global markets. Morgan Stanley noted that this move aligns with Baidu's strategy to maintain a light-asset business model, focusing on providing technology solutions. However, the expansion outside of China may face resistance from local media or governments due to potential impacts on local employment.
As of the first quarter of this year, Robocar has serviced over 1.4 million rides, marking a 75% year-over-year increase. It recently extended services to Dubai and Abu Dhabi, with plans to enter Switzerland and Turkey. Morgan Stanley remains optimistic about Tencent and Alibaba, viewing them as major beneficiaries of AI advancements in China.
Despite potential disruptions from generative AI in search, Morgan Stanley maintains a "market perform" rating for Baidu, with a target price of $95.
