Why Baidu (BIDU) Stock Is Trading Higher

Shares of Chinese tech giant Baidu Inc (BIDU) rose 3% to $87.24 Thursday afternoon after the Federal Reserve’s unexpected decision Wednesday to cut interest rates by 50 basis points. Shares of US-listed Chinese stocks are also possibly trading higher ahead of expectations that the People’s Bank of China will cut rates.

The Fed's move, which lowers the federal funds rate to a range of 4.75% to 5%, sparked renewed optimism for global tech stocks, particularly Baidu (BIDU), which is heavily reliant on growth and innovation capital.

Global Liquidity Boost Favors Baidu's Innovation Initiatives

The rate cut is expected to increase global liquidity, making borrowing cheaper and more accessible. This benefits Baidu (BIDU) significantly, as the company has been aggressively investing in cutting-edge AI technologies, autonomous driving and cloud computing.

Lower borrowing costs can ease financing for these capital-intensive projects, enabling Baidu (BIDU) to accelerate its innovation without excessive financial burden.

Analysts have long highlighted that Baidu's (BIDU) expansion into AI-driven businesses, such as its Apollo autonomous driving platform and Ernie AI model, requires substantial upfront investment. With the Fed's new rate trajectory suggesting more cuts ahead, the cost of capital will likely continue to fall, providing a favorable environment for Baidu (BIDU) to execute its strategic growth initiatives.

Read Also: Wall Street Ramps Up Interest Rate Cut Bets After Fed Meeting: ‘The Hard-Landing Crowd Should Disperse,’ Economist Says

Weaker U.S. Dollar Enhances Foreign Revenue

The Fed's decision has also led to a weakening U.S. dollar, which works to Baidu’s advantage. As a company with significant international exposure through its cloud services and AI products, Baidu (BIDU) stands to gain from a more favorable exchange rate.

A weaker dollar boosts the purchasing power of foreign customers and increases the value of Baidu's (BIDU) overseas revenue when repatriated to China. This exchange-rate benefit could further improve Baidu’s earnings outlook, a key factor that investors are betting on.

Read Also: S&P 500, Dow Jones Hit Record Highs: Magnificent 7 Add $400 Billion After Fed’s Historic Interest Rate Cut

How To Buy BIDU Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Baidu’s case, it is in the Communication Services sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, BIDU has a 52-week high of $136.53 and a 52-week low of $79.69.