Alibaba Vs Baidu: Which Chinese Tech Stock is the Better Buy Now?

Core Viewpoint - Investor sentiment has shifted towards Chinese tech stocks, particularly Alibaba and Baidu, amid a downturn in U.S. equities attributed to President Trump's tariffs [1] Group 1: AI Expansion - Alibaba has unveiled its new AI reasoning model, QwQ-32B, enhancing its market dominance alongside its diversified business endeavors [3] - Baidu is set to launch an upgraded version of its AI assistant, "Ernie," which parallels Alphabet's Google Gemini, leveraging its position as the largest search engine provider in China [4] Group 2: Recent Performance - Alibaba's stock has surged over 60% year-to-date, while Baidu shares have increased by 12%. In contrast, Amazon and Alphabet shares have declined by 10% and 13%, respectively [5] Group 3: Outlook and EPS Revisions - Alibaba's revenue is projected to rise by 6% in fiscal 2025, reaching approximately $147 billion, with annual earnings expected to increase by 2$10.83 per share [6] - Baidu's total sales are expected to grow by 1% in FY25 and 4% in FY26, with EPS projected to decrease by 9% in FY25 but rebound by 16% in FY26 to $11.17 [7] Group 4: Valuation Comparison - Alibaba trades at a forward earnings multiple of 15X, while Baidu is at 9.6X. In comparison, Amazon and Alphabet have forward earnings multiples of 30.7X and 18.6X, respectively [8] Group 5: Investment Ratings - Baidu holds a Zacks Rank 2 (Buy), while Alibaba has a Zacks Rank 1 (Strong Buy), indicating positive earnings estimate revisions and potential upside for both companies [9]