The second quarter revenue for Chinese tech company Baidu exceeded expectations, increasing by 15% year over year and supported by increase in advertising. According to Refinitiv statistics, this was the fastest quarterly year-over-year increase speed in two years.

In pre-market trading, Baidu’s U.S.-listed shares increased by more than 4%.

Compared to Refinitiv consensus estimates, here is how Baidu performed in the June quarter:

Revenue: 34.1 billion yuan ($4.7 billion) as opposed to the anticipated 33.28 billion yuan.

On a non-GAAP basis, earnings per American Depositary Share were 22.55 yuan as opposed to 15.79 yuan in the same quarter last year.

Online marketing revenue increased by 15% to 19.6 billion yuan within Baidu’s core businesses in the second quarter, while non-online marketing income increased by 12% to 6.8 billion yuan.

According to Robin Li, co-founder and CEO of Baidu, during an earnings call, the company’s use of AI to better match advertising to Baidu search queries helped enhance the quarter’s online marketing revenue growth from a year ago.

The main internet search engine in China is run by Baidu, along with popular consumer navigation and cloud storage apps.

“In the second quarter of 2023, Baidu Core accelerated revenue and profit growth, driven by the solid performance of online marketing business and operating leverage,” Li said in a release.

“Generative AI and large language models hold immense transformative power in numerous industries, presenting a significant market opportunity for us,” he said.

A public ChatGPT substitute called Ernie bot that was introduced by Baidu in March has been progressing in the Chinese language. It’s difficult to access the enormously popular competitor chatbot from OpenAI in the nation.

Five Ernie bot plugins, including ones for swiftly converting text to video and PDF search, were made more readily accessible to users last week, according to a statement from Baidu. The manufacturer claims that three of the plugins can be utilised at once.

According to Li, the company intends to include plugins from other developers.

For access to its Ernie bot, which was made available to more users via a waitlist early this year, Baidu has so far given priority to corporate partners.

Regarding governmental oversight, Li stated that Baidu is “still waiting for the green light for the large-scale rollout of Ernie bot for use in consumer facing apps.”

The most recent iteration of China’s AI regulations, he claimed, went into force on August 15 and are “more pro-innovation than regulation.” Compared to an earlier draught that was made public in April.

“We don’t have an exact date for everything. But the trend is very promising and we are quite optimistic about the future for a better regulatory environment,” Li said.

Last week, Baidu also unveiled an AI-powered assistant that could assist with activities like scheduling meetings, booking travel, and finding lodging. It was unclear right first how customers could get the assistant product.

The business wants to extend AI’s use to the auto industry. This month, the business unveiled a partnership with state-owned Changan Automobile to create autonomous driving technology based on the AI system that powers Baidu’s Ernie chatbot.

Other major Chinese IT companies are also making inroads into AI-related products, so Baidu is not alone in its incursion. The e-commerce behemoth Alibaba asserted earlier this month that there was “strong demand” for training artificial intelligence models in the cloud, and that the associated revenue opportunity was only getting started.

The internet giant Tencent announced last week that it would later this year introduce its own AI model for use in services like gaming and advertising.

In China, Baidu also runs autonomous cabs under the Apollo Go name. According to Baidu, it operated around 714,000 robotaxi rides in the second quarter, an increase from 660,000 in the first.

In November 2021, the business will be able to begin charging customers for public robotaxi journeys in Beijing. The rides, which are frequently heavily subsidised, can be reserved by passengers using an app.

The majority of the robotaxis, which are present in several areas of many large Chinese cities, nevertheless contain employees.

The business claimed to have gained permission to run robotaxis in a Shenzhen area without employing any people in June. Following similar clearance in August 2022, some robotaxis in Wuhan and Chongqing were deactivated.

(Adapted from CNBC.com)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy, Sustainability