The upcoming financial results from Baidu, the Chinese tech company often referred to as China's Google, may be overshadowed by risks to its artificial intelligence (AI) business. In contrast to Alibaba, which recently faced a setback due to expanded U.S. export controls on advanced chips, Baidu has been relatively stable. However, investors are keeping a close eye on Baidu's earnings report, set to be released early Tuesday.
Baidu's AI Business
Baidu has made significant strides in its AI endeavors, including ventures in driverless taxis and cloud computing. This year, it even introduced a chatbot as a competitor to ChatGPT. While Baidu's AI business appears promising, the challenges faced by Alibaba serve as a cautionary tale.
The Setback for Alibaba
Alibaba, another major Chinese tech company with a substantial AI business, recently announced that the expanded U.S. export controls have had a detrimental impact on its AI operations within the cloud division. These controls aim to limit Chinese access to critical technology. Alibaba expressed concerns that these rules could significantly impede its ability to offer products and services and fulfill existing contracts, ultimately impacting its financial condition.
As a result of this disclosure, Alibaba's stock has plummeted by 12%. Although Baidu has only experienced a 1.9% decline during the same period, the market's reaction suggests that investors fear Baidu may also face similar challenges. It remains to be seen how Baidu's earnings will be affected.
Analyst Expectations
Analysts surveyed by FactSet estimate that Baidu will report earnings of 17.11 Chinese yuan ($2.39) per share from revenue of 34.3 billion yuan ($4.8 billion) in the third quarter. This would indicate a modest growth of 1.5% in earnings and 5% in revenue compared to the same period last year.
As Tuesday approaches, all eyes will be on Baidu as it releases its financial results. The outcome will shed further light on the future of Baidu's AI business and its resilience in the face of potential obstacles.
PREVIOUS POST
