May 17, 2024

Chinese social media and tech firm Baidu released its latest earnings on Thursday, showing better revenue from cloud growth and advertising sales. 

BIDU-–-Daily-ChartBIDU – Daily Chart 

BIDU shares opened at around 3% lower, but the stock is still near the higher end of a channel, and a break above the $114-115 level on the US ADR would see breakout potential. 

Baidu beat analysts’ estimates for first-quarter revenue on Thursday, driven by a rebound in ad sales and higher demand for its AI-powered cloud products. 

The company, China’s largest search engine provider, reported revenue of 31.51 billion yuan ($4.37 billion) from March 31, compared to analysts’ expectations for 31.21 billion yuan as per LSEG data. 

Baidu has been increasing its efforts to boost sales of AI-related products and services. The latest move is part of an image rebranding plan, even though the majority of the firm’s revenue still comes from advertising sales. 

“Baidu Core’s online marketing revenue remained stable, while the end-to-end optimization of our AI technology stack continued to propel the growth of our AI Cloud revenue during the quarter,” CEO Robin Li said in the earnings release. 

Baidu Core’s revenue, including search-based ad sales, cloud offerings, and autonomous driving, grew 4% to 23.8 billion yuan. Revenue at its streaming service iQIYI fell 5% to 7.9 billion yuan. 

According to LSEG data, Baidu reported an adjusted net income of 7 billion yuan for the latest quarter, beating analyst estimates of 5.57 billion yuan. 

The company said in April that the number of users of its Ernie Bot, China’s most popular ChatGPT-style bot, had doubled to over 200 million in recent months. The chatbot launched in March 2023 is in intense competition with other large-language models in China, including Alibaba’s Tongyi Qianwen and Tencent’s Hunyuan. 

Baidu said on Thursday that it is working to make its Ernie models cheaper and more efficient, stating that the launch of several lightweight LLMs in the first quarter had already made Ernie more affordable. 

Alibaba and Tencent reported single-digit revenue growth this week for the March quarter. Alibaba’s profit was 11% lower, while Tencent grew 54%. 

Baidu shares have shown some recent weakness, but a sharp increase in AI users could help the stock price in the coming quarters.

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