Baidu Set to Post Q2 Earnings: What's in the Cards?

Baidu, Inc. BIDU is scheduled to report second-quarter 2024 results on Aug 22.

The Zacks Consensus Estimate for revenues is pegged at $4.74 billion, indicating growth of 0.8% from the year-ago quarter's reported figure.

The Zacks Consensus Estimate for earnings is pegged at $2.68 per share, suggesting a 13.8% fall from the prior-year quarter's reported figure. The estimated figure has been unchanged over the past 30 days.

BIDU's earnings beat estimates in the trailing four quarters, the average being 16.83%.

Factors to Consider

Solid momentum across Baidu's AI business is expected to have continued driving its top-line growth in the second quarter.

The company's deepening focus on bolstering its capabilities in generative AI is expected to get reflected in the upcoming results. The growing momentum of ERNIE Bot across China is anticipated to have been a tailwind. The strengthening ERNIE family of foundation models is likely to have driven customer momentum in the to-be-reported quarter.

Strength across Baidu Cloud is likely to have been a key catalyst for the business.

Solid momentum in BIDU's mobile ecosystem is expected to have aided growth in the average daily active user base of the Baidu App in the second quarter. The company's sustained efforts to bolster the mobile search engine and AI tools are anticipated to have contributed well.

The positive impacts of Baidu's expanding footprint in the autonomous driving space are expected to get reflected in the upcoming results.

The strong momentum of Apollo Go Robotaxi service across China on the back of its increasing availability in several cities and a growing number of rides is likely to have benefited the company in the quarter under review.

However, the impacts of higher promotional expenses and heavy spending on new growth areas are expected to have affected the company's performance in the quarter under discussion.

The impacts of softness in the company's iQIYI segment are expected to get reflected in the upcoming results.

Broad-based weakness in China is anticipated to have been a headwind.

The intensifying competitive landscape in generative AI and large language model markets is likely to have been concerning for Baidu.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Baidu this time around. 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 is not the case here.

Baidu has an Earnings ESP of 0.00%.

BIDU has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this time around.

American Eagle Outfitters has an Earnings ESP of +1.97% and a Zacks Rank of 2 at present.

American Eagle Outfitters is set to report fourth-quarter fiscal 2024 results on Aug 29. The Zacks Consensus Estimate for AEO's earnings is pegged at 38 cents per share, indicating growth of 52% from the year-ago quarter's reported figure.

Abercrombie & Fitch has an Earnings ESP of +5.40% and a Zacks Rank of 2 at present.

Abercrombie & Fitch is set to report its second-quarter 2024 results on Aug 28. The consensus estimate for ANF's earnings is pegged at $2.13 per share, indicating a significant jump of 93.6% from the prior-year quarter's actual.

Affirm has an Earnings ESP of +19.64% and a Zacks Rank of 2 at present.

Affirm is scheduled to release fourth-quarter fiscal 2024 results on Aug 28. The Zacks Consensus Estimate for AFRM's loss is pegged at 45 cents per share, narrower than the loss of 69 cents per share reported in the prior-year quarter.

To read this article on Zacks.com click here.