The downtrend has continued even after the company earlier this month announced plans to issue its first dividend and a three-year stock buyback program of as much as $5 billion in a bid to reward investors.

What Bloomberg Intelligence says:

“Baidu faces a difficult future financially, with its AI ventures set to lose money for at least the next three years. The Chinese tech giant’s continued lack of top- and bottom-line traction confirms our view that its AI prospects remain overhyped. The potential spinoff and IPO of Baidu’s KunlunXin chip business has no impact on Baidu’s near-term earnings prospects.”

— Robert Lea, senior technology analyst.

Some market watchers have expressed optimism ahead of the results.

“Baidu is moving into a phase where the contours of its AI-led transition are becoming more visible, in our view, with early signs that user adoption for AI functions, AI product integration into existing mobile Internet services and operational efficiency are beginning to improve,” JPMorgan Chase & Co. analysts led by Alex Yao wrote in a note last month.

Baidu’s 12-month forward consensus earnings estimate has also risen over 6% since reaching a more than three-year low late last month.

Even so, the options market is signaling investor caution. Demand for downside protection has increased, with the cost of insuring against a 10% drop in Baidu’s US-traded stock climbing to its highest level since April relative to upside bets earlier this week, according to one-month implied volatility data compiled by Bloomberg.

Options traders are pricing in a 5.7% swing in either direction for its American Depositary Receipts after the results. That’s more than the average 4.6% fluctuation seen following the last eight quarterly reports.

“Baidu needs to convince investors of greater adoption of its ERNIE-based agents, particularly on the enterprise side,” given that agentic AI systems — which require less human supervision — are becoming “a larger and larger disruption risk,” said Felix Wang, tech sector head at Hedgeye Risk Management.

Top Tech Stories

• Nvidia Corp., the dominant maker of artificial intelligence processors, failed to impress investors with its latest sales forecast, signaling that concerns about an overheated AI economy will continue to dog the company.

• Nvidia said it secured a license to ship a small number of its less advanced H200 chips to customers in China, inching forward in its bid to return to the world’s largest semiconductor market.

• Salesforce Inc. gave a lukewarm outlook for sales growth in the new fiscal year, fueling investors’ worries that the software giant will lose out to new competitors in the age of AI.

–With assistance from Cecile Vannucci and Zheping Huang.

(Adds ‘Top Tech Stories’ section)

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