Baidu is set to report its Q4 2024 earnings on February 18, 2025, pre-market . While the company has been making strides in AI and cloud computing, its advertising business faces headwinds, and monetization concerns linger over its AI initiatives.

At the same time, Chinese stocks have been surging due to renewed investor confidence, AI advancements, and government support. This broader rally could help Baidu’s stock performance in the short term, but earnings will be the real test.

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What Analysts Expect

• Estimated EPS: $2.22 (-5.9% QoQ, +0.5% YoY)
• Estimated Revenue: $4.36 billion (-8.8% QoQ, -9.7% YoY)

These estimates highlight a revenue decline despite strong AI investments, raising concerns about Baidu’s ability to translate innovation into earnings growth.

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Key Factors Affecting Earnings

Baidu’s Q4 report will be influenced by three major factors:

1. AI Growth and ERNIE 5.0 Launch

• Baidu is preparing to launch ERNIE 5.0, its next-generation AI model with multimodal capabilities.
• The company will offer free access to ERNIE chatbot from April 2025 to boost adoption.
• AI Cloud revenue is growing at a double-digit rate, now contributing 11% of total cloud revenue.
• ERNIE API usage surged, but monetization remains a key issue—AI-based search engines generate less ad revenue than traditional models.

2. Advertising and Revenue Pressure

• Baidu’s advertising business is underperforming due to macroeconomic weakness in China.
• The company expects a moderate recovery in ad spending, but competition from Tencent and Alibaba remains strong.
• Regulatory risks and China’s sluggish economic recovery could weigh on future ad revenue growth.

3. Chinese Market Rally – A Boost for Baidu?

• The Hang Seng Tech Index has surged 25% since mid-January 2025, driven by:
  • AI-driven optimism
  • Government stimulus
  • Higher shareholder returns (dividends and buybacks)
• Baidu’s stock rose 15% year-to-date, but broader economic risks remain.

Baidu’s stock could benefit from this renewed investor confidence, but long-term performance depends on whether AI investments translate into real revenue growth.

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Stock Performance and Technical Outlook

Baidu’s stock has been gaining momentum ahead of earnings, trading at $97.48.

Key levels to watch:

• Resistance: $99 (recent swing high)
• Support: $90 (key psychological level) and $85 (critical Fibonacci support)
• RSI: 62.24 (approaching overbought territory, potential for short-term pullback)

If Baidu beats earnings and delivers strong AI monetization guidance, it could:

• Break above $99 and rally toward $105-$110
• Test $120+ in the long run if AI adoption and ad revenue improve

However, if earnings disappoint, the stock may:

• Drop to $90-$85 support
• Face more downside toward $80 if AI monetization concerns persist

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Final Thoughts – Can Baidu Deliver?

Baidu’s upcoming earnings will be a major test for its AI strategy. The company has strong AI momentum, but monetization and ad revenue recovery remain key challenges.

• If Baidu can show AI-driven revenue growth, the stock could break out above $99.
• If AI remains an unproven growth driver, expect volatility and a possible drop to $90 or lower.

With the Chinese stock rally providing a short-term boost, all eyes will be on whether Baidu delivers earnings results that justify its recent gains.