The Chinese tech company
Baidu
is set to report its financial results early Tuesday. A warning from
Alibaba
last week is an indication that the earnings may be overshadowed by risks to its artificial intelligence business.
Hailed as China’s answer to Google, Baidu (ticker: BIDU) has a compelling AI business that includes units devoted to driverless taxis and cloud computing. It launched a rival chatbot to ChatGPT this year.
The problem is that Alibaba (BABA), another enormous Chinese tech company with a sizable AI business, has hit a major hurdle.
Alibaba said last week that expanded U.S. export controls on advanced chips—a bid to control Chinese access to critical technology—had slammed its AI business, housed within the group’s cloud division. The U.S. rules “may materially and adversely affect Cloud Intelligence Group’s ability to offer products and services and to perform under existing contracts, thereby negatively affecting our results of operations and financial condition,” Alibaba said.
Shares in Alibaba have shed 12% since its disclosure. Baidu stock is down 1.9% over the same period—a sign that investors may be worrying that it could deliver a similar bombshell. It is worth watching for when Baidu earnings drop early Tuesday.
Baidu is expected to report earnings of 17.11 Chinese yuan ($2.39) a share from revenue of 34.3 billion yuan ($4.8 billion) in the third quarter, based on the estimates of analysts surveyed by
FactSet.
That would represent earnings and revenue growth of 1.5% and 5%, respectively, since the third quarter of last year.
Write to Jack Denton at [email protected]
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