Baidu (BIDU:NSD), the leading Chinese tech company and search engine provider, is scheduled to report its first quarter 2023 results on May 16, before the market opens. The company is expected to have benefited from the recovery of China’s economy and the growing demand for its AI Cloud and autonomous driving businesses.
According to Stock Target Advisor, Baidu’s website traffic registered a 43.5% year-over-year growth in unique visits during the quarter. This indicates that demand for the company’s products and services remained strong during the quarter.
Analysts expect Baidu stock to report Q1 earnings of $1.76 per ADS, up 8.6% year-over-year. Meanwhile, revenue expectations are pegged at $4.32 billion, representing a fall of about 4%.
What are the Key Drivers for Baidu’s Q1 Performance?
Baidu’s online marketing business might have seen improved demand due to the reopening of China’s economy at the beginning of the year. The company’s core advertising revenues are likely to have increased by 3.5% year-over-year in Q1, according to Mizuho Securities analyst James Lee.
Additionally, Baidu’s AI Cloud business is well positioned for solid growth, thanks to the rapidly growing Chinese cloud services market. The company has been investing heavily in AI technologies and expanding its cloud offerings to various sectors, such as healthcare, education, finance, and smart transportation.
Moreover, Baidu’s Apollo Go Robotaxi service offerings (a self-driving ride-hailing platform) in key cities, including Beijing and Wuhan, are likely to have driven revenues in the to-be-reported quarter. The company has been a pioneer in autonomous driving in China and has obtained licenses to operate its robotaxis in several cities.
Baidu Stock Forecast:
Wall Street is strongly optimistic about Baidu stock. It has a Strong Buy consensus rating based on 14 unanimous Buys. The average price target of $191.46 implies a 59.5% upside potential from current levels. Shares have gained about 1% so far in 2023.
The company also has the backing of some prominent investors, such as Warren Buffett’s Berkshire Hathaway, which owns shares of Baidu worth $436 million, according to Stock Target Advisor.
The Takeaway:
Baidu is clearly a leader in China’s tech space and has a competitive edge in AI and autonomous driving. The company’s Q1 results are likely to reflect its strong momentum and growth prospects.
