Baidu Earnings to Gauge Impact of AI Investments on Lagging Stock Performance
Baidu Inc. (BIDU), China's leading internet search provider, will release its quarterly results on Tuesday. Investors will be scrutinizing the report for indications on whether the company's stock price underperformance is justified.
Baidu has been investing heavily in artificial intelligence (AI), which has spurred a stock surge in the industry. While its Hong Kong-listed shares have gained 18% since January, rivals Alibaba Group Holding (BABA) and Tencent Holdings (TCEHY) have jumped by at least 35% on AI-related news.
Apple has reportedly partnered with Baidu to develop AI features for devices sold in China. However, Baidu has faced challenges in monetizing AI amidst China's broader economic slowdown. Analysts forecast a 4.5% decline in revenue for the December quarter, the company's weakest performance since Q2 2022.
"Without a significant improvement in consumer confidence, it's unlikely that Baidu's advertising business will see a dramatic recovery," said Kai Wang, an analyst at Morningstar. This is crucial for Baidu's valuation, which currently trades at 9.4 times forward earnings, below its three-year average of 12 times.
Baidu's stock fluctuated on Tuesday, trading 0.3% lower as of 2:44 p.m. and lagging the Hang Seng Tech Index's 1.2% gain.