Chinese tech giant Baidu has doubled down on its commitment to artificial intelligence as the key to its future growth, as it reported estimate-busting third-quarter revenues on Tuesday.
The strong performance by the owner of China’s largest search engine was fuelled by a jump in advertising income as the Chinese economy shows some signs of recovery.
Revenue for the quarter ended September 30 was $4.72 billion, compared with analysts’ estimates that were $17 million lower, according to LSEG data.
China’s economy is set to grow 5.4% this year, the International Monetary Fund said earlier this month, making an upward revision to its earlier forecast of 5% growth. This has prompted companies to spend more on consumer advertising online.
US-listed shares of Baidu were marginally higher in pre-market trade.
Baidu has in recent years focused increasingly on AI, creating a self-driving vehicle and investing heavily in generative AI, which is capable of creating text, images and other media.
Last month, it unveiled the newest version of its generative AI model, Ernie 4.0, saying its capabilities were on par with those of ChatGPT maker OpenAI’s pioneering GPT-4 model.
Baidu’s Chief Financial Officer Rong Luo said the firm will continue to prioritise AI investments, especially in generative AI and foundation models, to power its growth.
“We will do so with an unrelenting focus on efficiency and strategic resource allocation.” Luo said in a statement.
US Export Curbs Impact
Unlike Chinese tech peers Alibaba and Tencent, which reported last week, the company did not mention what impact intensifying US export curbs on high-end technology to China might have on its cloud business.
Last week, Alibaba shelved its plan to independently list its cloud unit citing uncertainty created by the restrictions, that include the US barring Nvidia from selling advanced AI chips to Chinese clients.
Reuters reported earlier this month that Baidu placed an order for domestically-made AI chips from Huawei in August in anticipation of Washington tightening export curbs.
Baidu’s online marketing revenue rose 5% in the third quarter to 19.7 billion yuan.
During the quarter, Baidu reported adjusted net income of 7.27 billion yuan, up 23% from 5.89 billion yuan for the same period last year.
The company reported an adjusted profit of 20.4 yuan per American Depositary Share (ADS), compared with a profit of 16.87 yuan per share a year earlier. This also exceeded analysts’ average estimate of 16.55 yuan per ADS, according to LSEG.
- Reuters with additional editing by Sean O’Meara