Baidu Bulls Retreat as Earnings to Highlight Firm’s AI Challenge

Optimism about Baidu Inc.’s US-listed shares is waning ahead of the company’s third-quarter results, as traders debate whether the search engine’s artificial intelligence efforts will pay off.

Baidu shares’ buy-equivalent rating ratio has fallen to 74% this month, the lowest level since 2020, from 90% in May, according to data compiled by Bloomberg. Sentiment has turned increasingly cautious since the company said its first-quarter revenue grew at the slowest pace in more than a year as it struggled to monetize its lead in AI.

Analysts anticipate that the Beijing-based firm will announce a year-on-year drop in sales when it releases its results on Thursday. Options imply the stock will record a one-day move of 5.3% after the earnings. Baidu’s shares have declined 27% this year to trail the Nasdaq Golden Dragon China Index’s 2.8% gain.