Can Baidu Stand Up Against Qihoo and Google?

Coming out of a weakened Chinese stock market, Baidu (NASDAQ:BIDU) is trading low at around $113.45, with a 52-week high of $154.15. Concerns over a slowing economy and competition from Qihoo (NYSE:QIHU) have caused the stock to drop over 10 percent this year to date, but many analysts think the company is still a good bet, with most maintaining a “Buy” rating.  Based on historical valuations, analysts at Riedel Research think the stock could reach $250.

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Baidu looks more and more like Google (NASDAQ:GOOG) in China, especially as the American company continues to pull away. Qihoo took a stab at Baidu when it launched its own engine, but Baidu claims nearly 80 percent of revenue-based search engine market share in China. This mirrors Google’s massive market dominance. Despite attracting a lot of positive attention, Qihoo lacks maps, travel, and video searches. Qihoo has also been accused of stealing search results from Baidu and Google, and word on the street is that the future may hold lawsuits.

As the Chinese search wars rage on, it’s unlikely that either company will go away. In the United States, Google is king, but Yahoo! (NASDAQ:YHOO) pulls about 7 percent share, and is still capable of competing in the space. Qihoo, with most of its eggs still in antivirus software and a web browser, can sit comfortably in the underdog position. With the future of search and advertising spinning towards mobile and social — all eyes on Facebook (NASDAQ:FB) — it’s still possible for Qihoo or even a third player to grab the upper hand.

Until then, Baidu looks like the king of the castle, despite a downturn in the Chinese stock market.

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