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Alibaba (NYSE: BABA) and Baidu (NASDAQ: BIDU) are expanding their AI-oriented cloud businesses amidst tough economic challenges. Over the past five years, Alibaba’s stock has declined over 40%, while Baidu’s has dropped about 10%. Analysts predict that from fiscal 2025 to fiscal 2028, Alibaba’s revenue and earnings per share (EPS) will grow at compound annual growth rates (CAGR) of 8% and 12% respectively, while Baidu’s revenue is expected to grow at 3% CAGR but with EPS declining at a rate of 5%.
Both companies face regulatory pressures and increasing competition; Alibaba is struggling with difficulties in its core e-commerce sector, while Baidu’s search engine is yielding ground to platforms like Tencent’s WeChat and ByteDance’s Douyin. As both companies invest in higher-growth avenues, Alibaba appears to be better positioned for sustainable growth compared to Baidu, which is experiencing declines in its traditional advertising business.
Despite near-term challenges, Alibaba is viewed as a more favorable investment due to its more stable core business. The potential for a recovery in Chinese tech stocks hinges on easing U.S.-China trade tensions.
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