Baidu Shares Plunge 28.9% Year to Date: Time to Sell the Stock?

Core Insights - Baidu's shares have declined 28.9% year to date, significantly underperforming the Zacks Computer and Technology sector's growth of 30.6% [1] - The company's total revenues for Q3 2024 decreased by 3% year over year to RMB 33.6 billion ($4.78 billion), indicating ongoing weaknesses across various business segments [2] Financial Performance - The Baidu Core segment experienced flat revenue growth, with the online marketing segment declining by 4$2.68 billion), reflecting vulnerabilities to macroeconomic challenges [5] - AI Cloud revenues grew by 11% year over year, but this growth was insufficient to counterbalance declines in traditional revenue streams [5] - The cost of revenues increased by 1% year over year to RMB 16.4 billion, while operating expenses decreased by 5% to RMB 11.2 billion, leading to pressure on operating margins [8] - Free cash flow fell to RMB 2.6 billion ($376 million), raising concerns about the company's ability to sustain investments in emerging technologies [8] AI and Autonomous Driving Developments - Baidu's ERNIE platform now handles approximately 1.5 billion API calls daily, up from 600 million in August, but the financial impact of these AI investments remains uncertain [6] - The autonomous driving segment reported 988,000 rides in Q3 2024, a 20$18.59 billion, reflecting a year-over-year decline of 1.5% [9] - Baidu's current cash position is strong at RMB 144.5 billion ($20.59 billion), but the inability to achieve meaningful growth raises concerns about future performance [11]