Baidu slips; head-and-shoulders pattern forms at HK$106

Baidu shares fell to HK$112.3 in Hong Kong, reaching their lowest level since April 14 and down about 30% from the year-to-date high. The stock gapped lower on June 5 amid broader technology selling and has moved below both the 50-day and 200-day exponential moving averages.

On the price chart, analysts identify a head-and-shoulders pattern with the head near HK$160, a left shoulder around HK$140 and a right shoulder near HK$145. The neckline sits at about HK$106, aligned with the 61.8% Fibonacci retracement. The stock has already fallen below the 50% Fibonacci level at HK$116.

In the first quarter, Baidu’s legacy advertising segment reported 26 billion yuan in revenue, a decline of 29% year-on-year and 18% quarter-on-quarter. Overall revenue fell 2% quarter-on-quarter. Baidu’s Core AI-powered business generated 13.6 billion yuan in Q1, up 49% from 9.1 billion yuan a year earlier. Equity analysts project roughly 3% company-wide revenue growth for the current year and about 7.3% next year, driven largely by AI services.

US policy changes added another layer of uncertainty. The United States expanded a list of Chinese firms designated as linked to the military, a status that restricts some services from American companies and may affect access to advanced chips such as Nvidia’s H200.

Baidu is preparing an initial public offering of Kunluxin, its chip design unit, expected to be valued at more than US$14.7 billion. The company is also expanding its AI cloud and autonomous driving businesses and has reported millions of robotaxi miles in recent years. Baidu’s forward price-to-earnings ratio is about 17.5.

Market participants cite the HK$106 neckline as the next technical level to monitor. Other factors that could affect the stock include progress in the company’s AI deployments, the outcome of the Kunluxin IPO and any changes to export or investment restrictions that influence access to foreign technology suppliers.