Baidu to Report Q1 Earnings: What's in the Offing?

Baidu, Inc. BIDU is scheduled to report first-quarter 2024 results on May 16.
The Zacks Consensus Estimate for revenues is pegged at $4.31 billion, indicating a decline of 4.9% from the year-ago quarter's reported figure.
The Zacks Consensus Estimate for earnings is pegged at $2.30 per share, suggesting a 1.7% fall from the prior-year quarter's reported figure. The estimated figure has remained unchanged over the past 30 days.
BIDU's earnings beat estimates in the trailing four quarters, the average being 17.14%.

Factors to Consider

Baidu's first-quarter 2024 results are likely to have benefited from its strengthening AI business, driven by the growing momentum of ERNIE Bot across China.
Strength across Baidu Cloud is likely to have been another key catalyst for its AI business.
The company's increasing focus on bolstering its ad technologies by introducing AI chatbots for brands, enabling them to enhance user engagement and drive customer demand, is expected to have been a tailwind in the to-be-reported quarter.
Baidu's expanding partnerships with companies like Samsung, Honor and Autohome, which integrates ERNIE API into their own products, are expected to have further solidified its position as a leader in the generative AI market.
Strength in Apollo Go Robotaxi service across China, on the back of its ongoing efforts to expand its operating area and intensify operations during peak hours in areas with complex traffic conditions, is likely to have aided Baidu's intelligent driving business during the quarter under review.
Growing momentum in Baidu's mobile ecosystem is expected to have aided growth in the average daily active user base of the Baidu App in the first quarter.
The company's growing R&D efforts to enable enterprises and developers to use less advanced chips for efficient model training and inferencing are likely to have provided Baidu with a competitive advantage over its domestic peers in the to-be-reported quarter.
However, the impacts of higher channel spending, promotional expenses and heavy spending on new growth areas are expected to have affected the company's performance in the first quarter.
Further, broad-based weakness in China is anticipated to have negatively impacted the company during the quarter under review.
The intensifying competitive landscape in generative AI and large language model markets is likely to have been a headwind.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.
Baidu has an Earnings ESP of 0.00% and currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
NVIDIA NVDA has an Earnings ESP of +2.50% and a Zacks Rank #1 at present.
NVIDIA is scheduled to release first-quarter fiscal 2025 results on May 22. The Zacks Consensus Estimate for NVDA's earnings is pegged at $5.49 per share, suggesting a significant jump from the prior-year quarter's reported figure of $1.09 per share.
Abercrombie & Fitch ANF has an Earnings ESP of +5.10% and a Zacks Rank #2 at present.
Abercrombie & Fitch is set to report first-quarter 2024 results on May 29. The Zacks Consensus Estimate for ANF's earnings is pegged at $1.54 cents per share, indicating a significant jump from the year-ago quarter's reported figure of 39 cents per share.
Costco Wholesale COST has an Earnings ESP of +0.07% and a Zacks Rank #3 at present.
Costco Wholesale is set to report its third-quarter fiscal 2024 results on May 30. The Zacks Consensus Estimate for COST's earnings is pegged at $3.69 per share, suggesting a 7.6% growth from the prior-year quarter's reported figure.
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