Baidu Shares Look to Earnings for a Price Boost

Chinese tech firm Baidu will release earnings on Tuesday and need a positive performance to regain its bullish posture. 

BIDU – Weekly Chart

BIDU – Weekly Chart 

BIDU has slumped since September and is close to resistance at 116, the May support level. Rising above that level could result in further gains. 

Forecasts from 20 analysts expect HKD 2.30 per share, compared to HKD 2.31 per share from last year’s quarter. Compared to the prior quarter, sales are expected to increase by 2.96% to HKD 36.71 billion.

Investors will likely look past the company’s recent profitability and focus on its AI progress. Robin Li, co-founder and chairman, is looking to unlock new revenue streams in the race to gain an edge in generative AI. Li was on stage at a company event in October unveiling Baidu’s latest AI model, Ernie 4.0, saying it’s now just as good as Silicon Valley rival OpenAI’s GPT-4. 

The market will also consider the recent turmoil at OpenAI, which fired its CEO on Friday after he planned to move to Microsoft. The setback could further open the door to Baidu’s chatbot and slow progress at OpenAI. 

Baidu plans to introduce Ernie 4.0 into its products, including maps, cloud services and its search engine while expanding sales of its AI-powered applications. Those include a search engine that can respond to user questions with human-like conversations and a business data analytics tool for costs and project delivery times. 

Kai Wang, a Hong Kong-based equity analyst at Morningstar, said in October that new chip export restrictions announced by the US government in mid-October could deal a “serious blow” to Baidu’s AI business. The limits will put lower-performing chips increasingly out of reach for China’s tech firms. That could hurt the company’s ability to train its AI models. Baidu was said to have been part of a consortium of Chinese firms that ordered $5 billion in chips in August.

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