Huge investments AI infrastructure won’t be going away anytime soon, according to Baidu (BIDU) CEO Robin Li, who reckons companies will continue to spend big on cloud computing and data centers.
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At the World Government Summit in Dubai, he indicated that the big spending trend by technology companies was not about to grind to a halt despite the advent of DeepSeek and cheaper AI models that call into question the massive spending on AI infrastructure.
“The investment in cloud infrastructure is still very much required. In order to come up with models that are smarter than everyone else, you have to use more compute,” Li was reported by Reuters as saying.
Li acknowledged the rise of DeepSeek highlighted how innovation was unpredictable, and noted that constraints on access to the most advanced chips probably helped Chinese companies to innovate and lower costs.
Baidu launched its large language model, Ernie, in 2023 but it’s seen limited uptake.
Big Tech Continues to Invest in AI
Backing up the Baidu chief’s comments, earnings updates from U.S. tech giants confirm they have no plans to shrink capital spending on AI anytime soon.
Meta Platforms (META) signaled it will spend “hundreds of billions” on AI over the coming years, with $60 billion $65 billion slated for 2025.
Amazon (AMZN) surprised with a planned $100 billion investment in AI this year while Microsoft (MSFT) has already spent about $42 billion of expected $80 billion on AI this year. And Alphabet (GOOGL) said its spending on data centers and servers would rise to $75 billion this year from $53 billion in 2024, a third above Wall Street estimates for the year.
Combined, these four tech stocks have reported capital expenditure of almost $250 billion in 2024 and forecast this to rise beyond $300 billion this year.
Is BIDU Stock a Good Buy?
Overall, Wall Street has a Moderate Buy consensus rating on BIDU stock, based on nine Buys and six Holds. The average BIDU price target of $105.91 implies about 13% upside from current levels.
