Baidu set for strong quarterly earnings as AI push intensifies

July 24, 2017
Industry News
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China’s leading search engine operator expected to benefit from central government’s ambitious national artificial intelligence development plan
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Bien Perez
bien.perez@scmp.com

Internet giant Baidu is expected to report solid second-quarter financial results in line with consensus market estimates, as mainland China’s largest online search engine operator steps up its transformation into a global powerhouse in artificial intelligence (AI).

Analysts anticipate Nasdaq-listed Baidu to provide on Thursday further details about its AI strategy, following the State Council’s announcement last week of an ambitious national AI development plan.

“Laying out a road map for AI is a very encouraging sign of support from the government,” said Jefferies equity analyst Karen Chan.

Baidu is forecast to post a 21 per cent year-on-year increase in net profit to 3.4 billion yuan (US$503 million) in the three months ended June 30, according to a Bloomberg survey of analysts’ estimates.

That gain was attributed by Jefferies to a rise in average spending per online advertising customer and Baidu’s efforts in controlling its traffic acquisition cost.

Revenue is estimated to be up 14 per cent year-on-year to 20.7 billion yuan. It would represent the mid-point of Baidu’s second-quarter revenue guidance, ranging from 20.5 billion yuan to 20.9 billion yuan.

Investors this week will likely focus on Baidu’s search recovery outlook, mobile newsfeed advertising traction, content investment, and sales and marketing spending, according to Jefferies’ Chan.

In the first quarter, Baidu maintained its lead in terms of total search revenue on the mainland with a 75.9 per cent market share, according to data from Analysys International and Jefferies.

Google China seized a 10.2 per cent share, while Sohu subsidiary Sogou had an 8.4 per cent share in the same period. Continue Reading
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