Baidu (BIDU) Stock

China's Baidu has received the licence to test autonomous vehicles with its Apollo robotaxi service in Hong Kong as it expands its footprint outside Chinese mainland.

Baidu Inc. (BIDU) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.

Baidu's stock hit a new post-pandemic low during intra-day trading following a disappointing 3Q FY2024 earnings report, as management indicated no significant improvement in advertising spending patterns for 4Q. Despite beating on total revenue expectations, its online market revenue declined by 6% in 3Q, following by a 2% YoY decline in 2Q. Non-GAAP net income margin came in at 17.5%, indicating a significant sequential contraction, which led to a miss in non-GAAP EPS estimates.

Baidu's 3Q24 results were in line, but weak advertising due to China's soft macro backdrop and early-stage AI development are concerning. Ongoing investments in AI and autonomous driving could weigh on BIDU's cash-generative ad business, potentially leading to prolonged structural de-rating. Weak ad revenue is expected to continue into 2025, with no significant improvement in China's advertising market or consumer spending.

Baidu's leadership in AI, autonomous driving, and search engine transformation, combined with its compelling valuation, supports a bullish long-term investment thesis. Despite short-term challenges in online marketing revenue, Baidu's AI ecosystem expansion and robotaxi innovations position it for future growth. The Chinese government's fiscal and monetary policy measures are expected to boost economic growth, benefiting Baidu's recovery and earnings potential.

With Baidu reporting a double miss for Q3 2024, BIDU stock has dipped by ~6% to a multi-year support zone in the low $80s. In Q3, Baidu's AI Cloud and Apollo Go businesses made tremendous progress, but online marketing revenue shrunk -4% y/y amid headwinds from macroeconomic factors and "Search" renovation. Baidu's long-term prospects are strong, with significant advancements in AI and autonomous driving, supported by a robust balance sheet and potential for substantial future growth.

Baidu, Inc. (NASDAQ:BIDU ) Q3 2024 Earnings Conference Call November 21, 2024 7:30 AM ET Company Participants Juan Lin - Director, Investor Relations Robin Li - Co-Founder & Chief Executive Officer Junjie He - Interim CFO Rong Luo - Chief Financial Officer Dou Shen - Executive Vice President, AI Cloud Group Conference Call Participants Alicia Yap - Citigroup Alex Yao - JPMorgan Gary Yu - Morgan Stanley Lincoln Kong - Goldman Sachs James Lee - Mizuho Thomas Chong - Jefferies Wei Xiong - UBS Miranda Zhuang - Bank of America Securities Operator Hello, and thank you for standing by for Baidu's Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode.

Baidu.com (NASDAQ:BIDU), the Chinese internet search and robotaxi company, reported a fall in sales for the past quarter but higher profits, though both were better than expected.  The shares were trading down 2% in US premarket trading on Thursday, down 0.2% in Hong Kong.

Baidu's results weren't particularly bad, but it has failed to shake off problems growing advertising sales.