Baidu (NASDAQ:BIDU) is slated to report its first quarter 2023 results on May 16, before the market opens. The Chinese tech giant’s online marketing business might have benefited from improved demand due to the reopening of China’s economy at the beginning of the year.
Additionally, 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. Also, the AI Cloud business is well positioned for solid growth, thanks to the rapidly growing Chinese cloud services market.
On the plus side, TipRanks’ Website Traffic Tool suggests a strong performance in the to-be-reported quarter. According to the tool, 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 remained strong during the quarter.
Overall, the Street expects the company to post 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%.
Analyst James Lee Remains Optimistic
Ahead of the Q1 results, Mizuho Securities analyst James Lee reaffirmed his Buy rating on BIDU stock. The analyst believes that a recovery in the Chinese economy and improving business sentiment are likely to drive the company’s revenues.
Lee anticipates Baidu’s core revenues to increase by 3.5% year-over-year in the first quarter, while advertising revenue is expected to increase by 2.5%. The analyst also sees potential for cloud revenue growth, supported by “catching up on project implementations and easy comps.”
Is BIDU a Buy?
Wall Street is strongly optimistic about BIDU stock. It has a Strong Buy consensus rating based on 14 unanimous Buys. The average price target of $191.46 implies 59.5% upside potential from current levels. Shares have gained about 1% so far in 2023.
Ending Thoughts
Baidu’s first-mover advantage in autonomous ride-hailing services in China and the launch of its new chatbot, Ernie Bot, are expected to support the company’s long-term growth. Also, the normalization of business trends in China should aid performance this year.
