stock gained on Tuesday after the Chinese tech company reported better-than-expected quarterly results and gave investors hope over growth in its artificial-intelligence business amid risks to the sector.
Baidu (ticker: BIDU) reported earnings of 20.40 Chinese yuan ($2.86) a share on revenue of 34.5 billion yuan ($4.8 billion), beating expectations among analysts surveyed by FactSet of profit at 17.11 yuan a share on revenue of 34.3 billion yuan. This represents profit and revenue growth of 21% and 6%, respectively—results to smile at, considering the backdrop of China’s economic slowdown.
“Baidu reported solid third-quarter financial results, demonstrating resilience in a challenging economic climate,” said Robin Li, the company’s co-founder and CEO.
Hailed as China’s answer to Google, Baidu’s core business remains online search and advertising, though the group also has a compelling artificial intelligence (AI) business with units covering self-driving taxis, cloud computing, and a ChatGPT-style AI bot. Baidu began charging for its bot, called Ernie, this month, outside the scope of its third-quarter results, but updates on AI still took center stage.
“We’ve fully opened ERNIE API to cloud enterprises, empowering them to develop their own AI-native applications and solutions. Our AI-centric business and product strategy should set the stage for sustained multiyear revenue and profit expansion within our ERNIE and ERNIE Bot ecosystem,” Li said, adding that it has also leveraged its capacity in AI to “reinvent our consumer-facing and enterprise-facing products, as well as our own operations.”
But risks may still loom for the AI business, at least in the longer term, underscored by unexpected news from peer
(BABA) last week. Alibaba, which is also pushing into AI, warned that expanded U.S. export controls on advanced chips—a bid to control Chinese access to critical technology—had slammed its AI business, housed within the group’s cloud division.
The U.S. rules “may materially and adversely affect Cloud Intelligence Group’s ability to offer products and services and to perform under existing contracts, thereby negatively affecting our results of operations and financial condition,” Alibaba said.
It would be reasonable for investors to worry over similar risks exist for Baidu. Indeed, shares in Alibaba have shed 10% since its disclosure last Thursday, and Baidu stock fell as much as 5.5% over the same period—before paring losses—as the selloff spread.
For now, Baidu is maintaining that AI continues to be a pillar of growth and that it has sufficient chip supply for now. Shares in the company advanced 3.3% on Tuesday.
Write to Jack Denton at [email protected]