Baidu, the Chinese tech giant, announced its third-quarter financial results on Thursday, revealing a 3% year-on-year decrease in revenues, CNBC reports.
Despite the drop, the company exceeded market expectations, driven by growth in its artificial intelligence (AI) cloud business.
For the quarter ending September 30, Baidu posted a revenue of $4.78 billion, falling short of the previous year’s $4.75 billion but still surpassing analyst forecasts, which had predicted $4.63 billion. Net income for the period grew by 14%, reaching $1.09 billion.
One of the standout figures in Baidu’s earnings report was a 12% increase in its non-online marketing revenue, which amounted to $1.1 billion. This surge was primarily fueled by the company’s AI cloud services, which continue to show strong growth. Baidu’s CEO, Robin Li, pointed to the ongoing expansion of the company’s AI capabilities, particularly the success of its Ernie generative AI model and chatbot.
“Our strong AI capabilities are gaining broader market recognition, as evidenced by increasing adoption of Ernie,” Li said in the earnings release.
The Ernie bot, seen as a domestic alternative to OpenAI’s ChatGPT, now boasts 430 million users, with access to its underlying AI model occurring approximately 1.5 billion times daily, more than doubling the figure from August.
Despite these positive developments in AI, Baidu’s online marketing business, a key revenue driver for the company, faced some challenges. Li acknowledged the “ongoing weakness” in this segment, which partially offset the gains from AI cloud.
Baidu has also continued to push forward with innovations in AI, including the upcoming launch of Xiaodu AI Glasses, which are expected to be available for sale in the first half of 2025. These smart glasses will integrate Ernie’s AI capabilities with Baidu’s maps and search features, positioning the product as a potential competitor to Meta’s Ray-Ban smart glasses in the Chinese market.
Another bright spot for Baidu was its Apollo Go autonomous ride-hailing service, which saw a 20% year-on-year increase in rides during the third quarter. The number of monthly rides averaged 329,333, a significant jump from the 287,500 rides per month seen in the first half of the year. This growth highlights the potential for Baidu’s autonomous vehicle business, which continues to develop and gain traction.
While Baidu’s stock price dropped nearly 4% in premarket trading following the release of its earnings, the company remains optimistic about its AI-driven future.
“Despite the near-term pressures, we remain steadfast in our AI-focused strategy and are confident in our long-term trajectory,” said Li.
Thus Li reflected the company’s commitment to scaling AI and creating long-term value for consumers and businesses alike.
With a new management rotation announced last month, Baidu is positioning itself for continued growth, particularly in AI and autonomous technologies. Junjie He, who was previously head of the mobile ecosystem group, is now serving as the interim Chief Financial Officer, following the departure of former CFO Rong Luo to lead the mobile division.
