Baidu, Inc. BIDU is all set to unveil its second-quarter 2024 financial results on August 22nd.
Market analysts expect the company to report revenues of $4.74 billion, showing a modest 0.8% growth compared to the previous year.
On the earnings front, the consensus estimate stands at $2.68 per share, marking a decline of 13.8% from the corresponding period last year. Analysts’ projections regarding earnings have remained stable over the last month.
Baidu has consistently outperformed earnings estimates in the past four quarters, with an average beat of 16.83%.
Baidu, Inc. Price and EPS Surprise
Baidu, Inc. price-eps-surprise | Baidu, Inc. Quote
Key Factors at Play
The second quarter is expected to have seen strong growth in Baidu’s AI business, driving overall revenue performance.
Baidu’s strategic emphasis on enhancing generative AI capabilities is likely to be reflected in the upcoming results. The company’s ERNIE Bot’s increasing adoption in China and the expanding ERNIE model family are anticipated to have positively impacted customer acquisition.
The Baidu Cloud segment is expected to have been a significant growth driver during the quarter.
Baidu’s mobile ecosystem is projected to have experienced solid growth in average daily active users, aided by continued enhancements in mobile search engine and AI functionalities.
The company’s foray into autonomous driving is likely to bear positive results, with the Apollo Go Robotaxi service gaining traction in various Chinese cities.
However, higher promotional expenses and increased investments in new business areas might have exerted pressure on the company’s performance in the quarter under review.
Challenges in the iQIYI segment and broader market weaknesses in China are factors expected to impact the upcoming earnings announcement.
Baidu faces growing competitive pressures in the generative AI and large language model markets, posing additional challenges to sustain growth rates.
Evaluating the Prospects
Analysts’ predictions for Baidu’s earnings performance in this quarter are not definitive. While a favorable Earnings ESP combined with a Zacks Rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) generally enhance the likelihood of an earnings beat, this may not be the case for Baidu.
Notably, Baidu has an Earnings ESP of 0.00% alongside a Zacks Rank of #4 (Sell).
Stocks to Watch
For investors seeking promising options, consider the following stocks with a high potential to exceed earnings expectations:
American Eagle Outfitters is expected to announce its Q4 fiscal 2024 results on August 29, demonstrating resilience with an Earnings ESP of +1.97% and a current Zacks Rank of 2.
Abercrombie & Fitch is set to report its Q2 2024 results on August 28, with an Earnings ESP of +5.40% and a Zacks Rank of 2, indicating a substantial earnings growth potential.
Affirm is slated to release its Q4 fiscal 2024 results on August 28, with an Earnings ESP of +19.64% and a Zacks Rank of 2, signaling a narrower loss compared to the previous year.