Baidu Shares Drop On Weak Q2 Profit, Despite AI Strength; To Invest More In AI

(RTTNews) - Shares of Baidu Inc. were losing around 6 percent in the pre-market activity on Nasdaq after the Chinese AI and internet company reported Tuesday sharply lower profit in its second quarter with weak revenues mainly in online marketing business, despite improved performance in Core AI-powered Business. Going ahead, the company aims to invest in AI as the core driver of its long-term growth.

Robin Li, Co-founder and CEO of Baidu, stated, "With AI-powered Business now firmly established as the core of Baidu, we are strengthening the foundations for our next phase of AI-driven growth..... While our online marketing business remains under pressure, the growing momentum in our core AI-powered Business reaffirms Baidu's transition from an internet-centric company to an AI-first company, and strengthens our confidence in our long-term growth potential."

Baidu further said it is moving forward with its conversion to a dual-primary listing in Hong Kong and expect it to become effective within this year.

In the second quarter, net income attributable to Baidu fell to RMB2.319 billion or $342 million from last year's RMB7.322 billion.

Earnings per share plunged to RMB0.72 or $0.11 from RMB2.54 a year ago. Earnings per ADS were RMB5.74 or $0.85, down from RMB20.35 last year.

Adjusted earnings were RMB2.573 billion or $379 million, and earnings per ADS of RMB7.22 per share or $1.06 for the period, compared to RMB13.58 a year ago.

Adjusted EBITDA dropped to RMB6.150 billion or $906 million from last year's RMB6.492 billion.

The company's revenue for the period fell 4.2 percent to RMB31.325 billion or $4.617 billion from RMB32.713 billion last year.

Baidu General Business revenue dropped 4 percent to RMB25.2 billion.

The company recorded 19 percent drop in Online Marketing Services revenues to RMB13.1 billion.

Baidu Core AI-powered Business, however, climbed 25 percent year-over-year to RMB12.5 billion, and continued to account for half of Baidu General Business revenue, compared to 38 percent last year.

Revenue from AI Cloud Infra was RMB7.3 billion in the quarter, up 50 percent year-over-year. Within AI Cloud Infra, revenue from GPU Cloud increased by 283 percent.

Revenue from AI Applications was RMB2.5 billion, up 3 percent from last year.

Meanwhile, Legacy Business revenue fell 23 percent from last year to RMB10.4 billion.

Revenue from AI-native marketing services reached RMB 2.6 billion, approximately flat year over year.

In Robotaxi, Apollo Go, Baidu's autonomous ride-hailing service, reached 28 cities so far, and its fleets have accumulated over 350 million autonomous kilometers, including over 240 million fully driverless autonomous kilometers.

In pre-market activity on Nasdaq, the shares were losing around 5.45 percent, trading at $98.45, after closing Monday's regular trading 0.43 percent higher.

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