Baidu shares rose on Tuesday after the Chinese technology company reported better-than-expected quarterly results and gave investors hope for growth in its artificial intelligence business amid risks to the sector.
Baidu (ticker: BIDU) reported earnings of CNY20.40 ($2.86) per share on revenue of CNY34.5 billion ($4.8 billion), beating analysts surveyed by FactSet’s forecast of CNY17.11 per share on revenue of CNY34.3 billion. This represents a growth in profits and revenues of 21% and 6%, respectively, which are results to smile about, given the backdrop of the economic slowdown in China.
“Baidu reported strong financial results in the third quarter, demonstrating resilience in a challenging economic climate,” said Robin Li, co-founder and CEO of the company.
Hailed as China’s answer to Google, Baidu’s core business remains online search and advertising, although the group also has a compelling artificial intelligence (AI) business with units covering self-driving taxis, cloud computing and robotics. Artificial intelligence similar to ChatGPT. Baidu began charging fees for its robot, called Ernie, this month, outside of third-quarter results, but AI-related updates continue to take center stage.
“We have fully opened up the ERNIE API to cloud enterprises, enabling them to develop their own AI applications and solutions. Our AI-focused business strategy and products should pave the way for multi-year sustainable revenue and profitability within our ERNIE and ERNIE Bot ecosystem,” Lee said. “, adding that it has also strengthened its ability in artificial intelligence to “reinvent our consumer-facing system” and enterprise-facing products, as well as our own operations.
Advertisement – Scroll to continue
But risks still loom for the AI business, underscored by surprising news from peer Alibaba (BABA) last week. Also on AI, Alibaba has warned that expanded US export controls on advanced chips – in an attempt to control China’s access to critical technology – has hurt its AI business, which is located within the group’s cloud division.
Alibaba said the US rules “may materially and adversely affect Cloud Intelligence Group’s ability to deliver products and services and perform under existing contracts, adversely affecting our results of operations and financial condition.”
It would be reasonable for investors to think there are similar risks for Baidu, which will also need to secure chip supplies to fuel its AI growth. In fact, Alibaba shares have fallen 10.5% since the disclosure last Thursday, and Baidu shares have fallen as much as 5.5% over the same period — before cutting losses — as the sell-off spreads.
Advertisement – Scroll to continue
For now, Baidu maintains that AI is still a pillar of growth — or showing a brave face, at least. The company’s shares rose 2.4% in U.S. premarket trading on Tuesday after it reported earnings.
Write to Jack Denton at [email protected]
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”