On Tuesday, China’s most significant internet search engine provider, Baidu (9888. HK), beat third-quarter revenue estimates, helped by more substantial advertising income as the Chinese economy shows signs of recovery. The Nasdaq-listed company’s revenue for the quarter ended Sept. 30 was 34.45 billion yuan ($4.72 billion), up from the year-ago figure of 31.88 billion yuan and exceeding analysts’ estimate of 34.33 billion yuan, according to LSEG data.
Advertisers increased spending on digital marketing, especially in healthcare, business services, local services, and travel. “The easing of lockdowns by the government on Covid-19-related business and consumer spending has boosted online advertising for many verticals,” Baidu Chief Executive Robin Li said in a conference call with investors.
Baidu is also benefiting from its investments in autonomous driving and cloud technology. Its Apollo Go robotaxi service, launched in September and is now available across nine cities in China, has delivered 474,000 rides as of the end of September, up from about 160,000 in the second quarter. The company also has a 10 billion yuan fund to invest in more than 100 autonomous driving projects over the next three years.
Nonetheless, the Beijing-based tech giant has been losing ground to up-and-coming rivals in the fast-growing field of artificial intelligence, such as TikTok owner ByteDance. Its focus on AI has pushed its R&D budget to 21% of its total revenues, up from around 19% in 2020, and it is re-positioning itself as an AI infrastructure provider.
The company’s revenue from cloud and AI services, which include its DuerOS virtual assistant and generative deep learning model, was up 31% in the quarter. The company focuses on providing solutions that will help businesses improve customer service, increase sales, and lower operating costs.
In the future, Baidu plans to expand the scope of its generative deep learning model to include natural language processing and video generation to improve understanding, logic, memory, and image recognition. “We believe this will lead to breakthroughs in areas such as self-driving and medical care,” Li said.
Baidu will hold a conference call at 9 a.m. EDT (14:30 UTC) to discuss its earnings results. The conference call will be webcast on the company’s website.
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