Baidu, the leading search engine in China, surpassed revenue and profit estimates in the first quarter, benefiting from increased advertising spending in the country’s post-COVID recovery. The company also revealed plans to introduce its own AI-driven chatbot, Ernie, pending regulatory approval.
As China’s economy shows signs of revival, Baidu experienced a rapid economic recovery after the Lunar New Year, particularly benefiting advertisers in offline sectors like travel and healthcare. Some verticals have already surpassed pre-pandemic levels, indicating a solid recovery.
In Q1, Baidu’s revenue reached 31.14 billion yuan ($4.54 billion), surpassing analysts’ expectations of 29.97 billion yuan. Baidu Core, which includes search-based advertising, cloud services, and autonomous driving initiatives, reported an 8% revenue growth to 23 billion yuan. Online marketing, the largest segment, contributed 16.6 billion yuan, a 6% increase. Baidu’s streaming service, iQIYI, witnessed a 15% rise in revenue to 8.3 billion yuan, driven by a 28% growth in its subscriber base.
The company’s shares rose by 3% during intra-day trading on Tuesday. Baidu reported a net income of 5.83 billion yuan, a significant improvement from the net loss in the same quarter last year. Adjusted earnings per American Depository Share (ADS) were 16.10 yuan, surpassing Wall Street’s estimate of 12.46 yuan.
Despite generating excitement with its Ernie bot, Baidu is still awaiting official launch pending government review and approval. The company intends to gradually incorporate this AI-driven chatbot into its various businesses, but no specific timeline has been provided. Baidu’s CEO, Robin Li, stated that they have engaged in discussions with regulators and plan to roll out Ernie bot on a large scale once they receive the necessary approval.
Li also emphasized that despite new players entering the Chinese generative AI and large-language model industry, Baidu anticipates a highly concentrated market with 2-3 major players eventually emerging. Establishing a significant presence requires substantial upfront investment, robust AI expertise, and extensive data for model training.
Addressing concerns about U.S. restrictions on China’s access to certain chips impacting the AI industry’s development, Li assured that Baidu has secured a substantial amount of computing power, including advanced GPUs, to continue training and enhancing Ernie bot.
Baidu’s strong financial performance and plans for the Ernie bot underscore its position as a leading player in China’s evolving AI landscape, poised to shape the future of AI-driven chatbot technology.
