Baidu Earnings: BIDU rises 4% following 43% increase in adjusted earnings
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- Baidu beat Wall Street consensus for the second quarter.
- BIDU stock jumped more than 4.5% on the news.
- Revenue rose 15% YoY at the Chinese search giant.
- Executives intimated their strong belief in utilizing new generative AI technology.
Baidu (BIDU) stock surged in Tuesday’s premarket following the Chinese search giant’s release of a major earnings beat for the quarter ending June 30. Despite trading sideways all year due to a faltering Chinese economy, Baidu was able to raise revenue 15% YoY and witnessed a 43% increase in adjusted earnings per average diluted share (EPADS).
Baidu stock has increased 4.5% to $130.50 at the time of writing, while NASDAQ 100 futures have gained 0.7%.
Baidu stock news
Baidu reported $3.11 in adjusted EPADS in the quarter, beating Wall Street consensus by $0.78. In the Chinese currency Renminbi (RMB), this meant a rise from 15.79 RMB to 22.55 RMB YoY. Sales of $4.7 billion beat the consensus estimate by $130 million.
“The improvement in profit and margins as well as strong cash generation were primarily driven by revenue acceleration and efficiency gain," said CFO Rong Luo.
Luo said that core adjusted operating profit grew by 27% YoY as Baidu’s adjusted operating margin expanded from 22% to 25% over that time period.
"Generative AI and large language models hold immense transformative power in numerous industries, presenting a significant market opportunity for us,” said co-founder and CEO Robin Li. “To stay ahead of the game, we keep upgrading our models to generate more creative responses, while improving training throughput and lowering inference costs. Our latest foundation model, ERNIE 3.5, has been well recognized by our cloud customers, AI developers and industry experts.”
In just the past month, it was reported that Baidu had ordered more than $1 billion worth of leading-edge AI chipsets from Nvidia (NVDA) for building its own generative AI systems, particularly ERNIE.
Baidu’s iQIYI on-demand video platform grew revenue 17% YoY as well. However, the platform’s average daily number of total subscribing members fell nearly 14% from the first quarter while still rising 13% from a year ago.
Baidu stock forecast
Baidu stock has fallen severely in August after it reached the $154 to $161 resistance zone – which has remained significant for more than a year – on July 31. Having drifted sideways for the better part of two years, BIDU stock is now trading well below both its 50 and 100-day Simple Moving Averages (SMAs).
At 27, the Relative Strength Index (RSI) is oversold, so this earnings rally should make a good entry point for bulls. The 100-day SMA sits near $136, and its 50-day counterpart is higher, close to $143. This means that despite sinking so swiftly in August, Baidu stock technically remains in a medium-term uptrend. Bulls will need to regain that 100-day SMA soon in order to keep it going.
Support levels come at $125 and $117, although the daily chart shows that BIDU traded below the $125 level on Monday.
BIDU daily chart
