Chinese search giant Baidu, Inc. (NASDAQ: BIDU) ended 2017 on a much better note than it started the year. After experiencing challenges in 2016, the company crushed it last year, overcoming government scrutiny and public outcry to produce market-beating returns.
Investors are more concerned with the future than the past and, as such, are looking to 2018 to see what Baidu has in store. With forays into streaming video, artificial intelligence (AI), and self-driving cars, the company is setting the stage for future success. The company made some intriguing announcements at the Consumer Electronics Show (CES) early this year, showing that there is more to come.
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Based on its recent performance and current developments, 2018 could be Baidu's best year yet.
Recent revelations show that Baidu's history of innovation is continuing.
The company announced it would be adding three smart hardware products powered by its conversational computing platform DuerOS. The Little Fish VSI Smart Speaker features a built-in screen, providing users with a wide range of functionality. The device integrates with iQiyi, the company's streaming service, providing users a large video library. It can also support multi-party video calls, as well as voice access to Baidu's leading search. Little Fish also delivers facial recognition and parental controls.
Baidu also unveiled the Sengled smart lamp and speaker, also featuring the DuerOS. The product is the first voice-enabled smart lamp in China, and supports a variety of lighting modes. It can be used as a night light, reading lamp, and provides 16 million color configurations that can react to the rhythm of a song -- all accomplished via voice commands.
The company also introduced the Aladdin smart dome light, which will jointly debut for customers in Japan. The device serves as a light, a projector, and smart speaker, and its smaller form factor is optimized for smaller home sizes in Japan.
These come on the heels of Baidu's launch of the Raven series of AI-powered smart home products at Baidu World in November, which the company describes as "a blend of technology and art." The Raven H smart speaker hosts a detachable base for portability, while the Raven R is "the world's first automated six-axis robot with emotional intelligence."
Driven to succeed
In a surprise move last year, Baidu announced that it would open source its self-driving car technology, which it named Apollo, after the U.S. lunar landing program of the same name. Baidu has said that it aims for Apollo to be the "Android of the auto industry." At CES, Baidu introduced Apollo 2.0, the "most robust version yet" of the company's autonomous driving platform.
Baidu has enlisted more than 90 partners in the venture and revealed that Microsoft (NASDAQ: MSFT) would provide its Azure cloud computing platform for markets outside China, including a recently announced expansion into Singapore. Apollo will integrate with self-driving computing platforms from Intel Corporation and NVIDIA Corporation (NASDAQ: NVDA). This continues a long collaboration between NVIDIA and Baidu, which last year announced a far-reaching AI partnership which resulted in NVIDIA's DRIVE PS 2 AI supercomputer forming the foundation of Baidu's self-driving platform.
The Apollo platform has been adopted for passenger vehicles, buses, and ride-sharing companies and Baidu plans to launch a pilot in Los Angeles in 2018 to provide short distance autonomous rides to those with disabilities.
The best is yet to come
Baidu is widely regarded as having the most advanced AI program in China and among the best in the world. The company reorganized itself around a foundation of mobile and AI, and those efforts are beginning to bear fruit. The company was chosen by the Chinese government to lead the development of the country's national laboratory for deep learning.
Baidu believes that with strong government support and the largest population of consumers worldwide, the company is well-positioned to close the gap with the U.S. in developing AI technology.
In its 2017 third quarter, Baidu's revenue grew to $3.53 billion, up 29% year over year, while its earnings per share of $3.62 grew 182% over the prior year quarter -- both of which blew past analyst's consensus estimates of $3.47 billion and $2.19 per share, respectively. This shows that the company has returned solidly to growth, putting its prior challenges in the rearview mirror.
The combination of new products, a growing list of big-name partners, and a significant head start in the development of AI, I think 2018 will be Baidu's best year yet.
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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Danny Vena owns shares of Baidu. The Motley Fool owns shares of and recommends Baidu and Nvidia. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.
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