There was a time when Baidu (NASDAQ:BIDU) was a market darling. China's leading search engine dominates the paid search market, and the scintillating growth prospects of the world's most populous country in the early stages of online migration sent Baidu stock skyrocketing. 

Baidu has been a wealth-altering 60-bagger since going public 14 summers ago, but it was an even bigger treat when it peaked as a 105-bagger in May of last year. The stock has taken a beating since its springtime peak, but the next year -- and, more importantly, the next five years -- don't have to follow the same path. 

Baidu developers in front of a Baidu sign.

Image source: Baidu.

Betting on Baidu

Growth has slowed at the former dot-com dynamo over the years, but it's still moving at a heady clip. Reported revenue climbed 22% in its latest quarter, up a heartier 28% if you back out the secondary businesses it unloaded in 2018. Top-line growth is expected to decelerate in the near term, but a lot of that is tied to the general slowdown in the Chinese economy. 

Check out the latest Baidu earnings call transcript.

China's economy should get back on track well within the next five years, and as long as Baidu remains the undisputed search champ, it's not going to matter. China commands more than two-thirds of China's search market. A couple of years ago, it was considered a laggard in mobile, but it turned things around on that front. Baidu is presently commanding a 71.82% share of the mobile search market, according to traffic tracker StatCounter GlobalStats, actually better than its  68.67% slice of its original desktop stronghold. 

Baidu begins the new year with $18.7 billion in cash on its balance sheet. If it ever starts losing relevance in high-margin search or smokes out new opportunities in machine learning and artificial intelligence, it can get up to speed quickly by writing a check for an acquisition or a material investment in internal development. 

It would be surprising if Baidu doesn't beat the market through the next five years. It's out of favor now -- trading at just 16 times this year's profit target -- but it has bounced back from all of its previous lulls. Baidu may take a hit whenever China's regulatory agencies twist the screws on usage or grow more restrictive about online advertising requirements, but Baidu finds a way out. Though Baidu itself has had a couple of self-inflicted mishaps, it's been able to win back its good name without ever sacrificing its dominant lead in search. 

You can't judge where Baidu will be in five years or even a few quarters based on today's challenging climate. The economy was slowing long before the trade tariffs tension with the U.S. began to escalate, and that naturally leads advertisers to curtail their spending on lead generation. The weakness may last months or even a few quarters, but does anyone think that the world's largest country won't bounce back? Baidu will be there when it happens, and possibly in an even better position as it shakes out weaker players and can snap up growth opportunities on the cheap during the downturn. 

Analysts see Baidu's earnings and revenue clocking in 50% and 56% higher, respectively, in three years. There aren't enough Wall Street pros open to stretching their models out beyond that, but even the three-year goals will prove conservative as China's search dominance pays off in new ways. Baidu has been on the leading edge of everything from self-driving cars to short and flash video platforms. Baidu's DuerOS is becoming the voice assistant operating system of choice for a growing number of smart devices and other applications.

Baidu doesn't need to win everywhere it goes. It can sell or even spin off any of its businesses. Paid search alone could be enough for it to beat the market in the next five years, though success in any other initiative would juice up results. Betting against it may be popular now. Short interest was at its highest point in more than a year when this month began. Betting on Baidu remains the historically accurate position for long-term investors.