Cathie Wood Increases Stake in Baidu as AI Chip Restrictions Boost Chinese Tech

Ark Invest's Cathie Wood has added to her position in Baidu (BIDU) for the first time in four months, signaling confidence in the Chinese search giant's AI potential. The stock has surged 53% since late 2025, fueled by US restrictions on Nvidia's H20 AI chips that are forcing Chinese firms to develop domestic alternatives.

Baidu's second-quarter earnings revealed troubling fundamentals - revenue declined 4% while adjusted profits plummeted 35%. Yet the market is betting on the company's artificial intelligence capabilities as geopolitical tensions reshape semiconductor supply chains. The stock now trades at rock-bottom valuations despite its dominance in China's search market.

The rally underscores how trade barriers are creating unexpected winners. While Nvidia initially gained on reports of a potential revenue-sharing deal with the White House, Chinese tech firms like Baidu are emerging as beneficiaries of forced innovation in AI hardware.