[KDJ] iQiyi (IQ) AI Strength Efficiency -> Potential Upside Ahead Of Earnings

But I think we need to look at how IQ have been participating in the AI revolution. We can see that there have been a vast array of potential applications for AI in the entertainment industry. One advantage that IQ have created for itself is they waste no time in deploying them.

One advantage we need to take note is IQ is trading more than 50% below its fair value.

Generative AI is being used to improve ad creation, mass production of marketing materials and generation of plot summaries. The efficiency of content production is also being improved by the “iQIYI Content Production Management System” which records the production process, this is backed up by results, with content cost having fallen by 5% annually for Q4 and the content related cost ratio having declined by 12% annually.

iQiyi plan for further integration of and investment into AI to speed up production looks to catalyse IQ stock. But we need to understand that deployment could be made easier now, how about the longer term impact of AI on IQ?

Would the existence of generating models which will grow more sophisticated in the future, ended up threatening IQ ecosystem?

Another competitive advantage that IQ might bring is its strong content.

If you are a subscriber of iQiyi, you will discover that over the last year, they have been producing an increasing percentage of originals, which now account for 65% of drama releases.

In 2023, we can see that there is significant increase of average daily number of subscribing members of iQiyi platform, from 103.1 million to 111.9 million.

So another area to look at is the increase of subscriptions and how the market share have iQiyi capture in regions outside China?

In this article, I would like to show how I have used KDJ indicator to look at how IQ price have moved and how we can look at the trend and see if IQ forming an upside?

KDJ indicator is otherwise known as the random index. It is a very practical technical indicator which is most commonly used in market trend analysis of short-term stock. KDJ is a derived form of the Stochastic Oscillator Indicator with the only difference of having an extra line called the J line.

We need to understand that this is for short term, so ahead of earnings, I find that relevant.

If we looked at the KDJ chart below, we can see that there was a BUY opportunity on 22 April if we followed the KDJ signal where a crossover happen when J value went above.

The most recent signal was a SELL, when we saw KDJ went under with a crossover, and J value is trending downwards.

Looking at the most recent, we can see that a crossover is about to form and J value would be coming up, so this might be a BUY opportunity.

I would think that iQiyi IQ AI strategy is pretty well received by the market, and we could see that IQ is trading sideways now, preparing for an upside, if we observe how the past pattern played out.

I would be preparing to take a position when I got a confirmation from the KDJ signal.

Appreciate if you could share your thoughts in the comment section whether you think IQ should be coming with a upside build up into its earnings.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.