- Wednesday, October 16, 2024
Net Profit Forecast
Baidu is expected to report a net profit of 4.96 billion yuan ($689.3 million) for the fourth quarter. This figure is on par with the previous year but reflects a 26% drop from the third quarter. Analysts attribute this decline to increased SG&A and R&D expenses which may lead to the company's first sequential drop in operating profit in a year.
Revenue Outlook
The Chinese search engine giant is forecasted to generate revenue of CNY35.065 billion, surpassing last year's CNY33.08 billion and CNY34.45 billion in the third quarter. Analysts anticipate a 6% increase in core ad revenue and an 8.4% growth in non-ad revenue, supported by a 1% boost in AI Cloud revenue and a 3% rise in non-cloud revenue.
Stock Performance
Baidu's Hong Kong-listed shares have declined by 6.8% since the start of the year following a 13% drop in the previous quarter. The dip was triggered by reports of Chinese military AI testing with Baidu's Ernie bot, which the company refuted any involvement with. Analysts believe the market response was exaggerated as the researchers likely used a public version of Ernie, emphasizing that official or commercial usage would have required a formal agreement.
Key Points to Monitor
AI Monetization: Baidu is capitalizing on its AI capabilities within its advertising and cloud services. Analysts predict a higher contribution of AI revenue towards total core ads and cloud revenues by 2024 as enterprise adoption of AI improves.
Buyback Program: In an effort to boost investor confidence, Baidu announced an aggressive share buyback strategy starting from the fourth quarter. Analysts suggest that an acceleration in repurchases may be necessary to stabilize share prices.
Stay tuned for Baidu's earnings report for further insights.
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