Chinese tech giant Baidu announced a 3% decline in third-quarter revenues, coming in at $4.78 billion, a figure for the quarter ending September 30. The figure still managed to top market expectations, however, based on growth in AI cloud business. Net income for the quarter came in at $1.09 billion, up 14% year-on-year, with the company showing solid financial performance despite broader market headwinds.
The non-online marketing business generated a more impressive 12% increase to $1.1 billion, mainly from its cloud AI operations. That helped to partially counterbalance continued weakness in Baidu’s core online marketing business, where ad spending by small and medium-sized businesses remained languid. Baidu is looking forward with optimism, though. Its CEO Robin Li told investors that net income was higher due to greater adoption of Ernie generative AI model, which he believes is gaining significant traction.
Baidu’s shares, traded in the U.S., lost 2.3% in premarket trading after the earnings results release. Analysts estimated revenues of $4.63 billion and net income of $857 million. A year ago, Baidu recorded revenue of 34.45 billion yuan ($4.75 billion) and net income of 6.68 billion yuan.
One of the strategic focuses for Baidu lies in its AI cloud business; generative AI now contributes 11% to the revenues from its AI cloud business, doubling from the previous quarter’s 9%. Another feature that further highlights Baidu’s AI efforts is the success of the Ernie chatbot- with a user base of 430 million and accessed around 1.5 billion times daily.
Moreover, Baidu is also taking a step into hardware with AI capabilities for its upcoming Xiaodu AI Glasses to be launched in the first half of 2025, branding this product as a Chinese rival to Meta’s Ray-Ban smart glasses.
Despite near-term pressures, Baidu’s leadership are optimistic and expect to drive innovation and value creation through AI in nearly every sector from its autonomous ride-hailing business, Apollo Go, which have risen by 20 percent year over year in rides during the quarter.
