Baidu Stock Pulls Back On Mixed Q3 Results: Retail Applauds Company’s Positive Long-Term Commentary

Chinese search engine and artificial intelligence (AI) company Baidu, Inc. ($BIDU) reported sub-par third-quarter earnings amid weakness in its core online marketing business.

Beijing, China-based Baidu reported third-quarter non-GAAP earnings per ADS of 16.60 yuan or $2.37, marking a 19% year-on-year (YoY) decline and a 21% sequential drop. Analysts, on average, estimated 17.90 yuan per ADS for the quarter, according to Yahoo Finance.

Total revenue slipped 3% YoY and 1% sequentially to 33.56 billion yuan or $4.78 billion, slightly ahead of the 33.43-billion-yuan consensus estimate polled by LSEG, according to Reuters.

Baidu Core revenue was flat YoY to 26.5 billion yuan, with online marketing revenue slipping 4% to 18.8 billion yuan. The decline was offset by a 12% increase in online non-marketing revenue, driven by the AI Cloud business.

Revenue from iQIYI, Baidu’s Chinese subscription video on-demand over-the-top streaming service, fell 10% to 7.2 billion yuan.

Commenting on the quarterly performance, Robin Li, CEO of Baidu said, "Core's flattish third quarter top line reflected the ongoing weakness in our online marketing business, offset by the growth of our AI Cloud business."

Li, however, said Baidu’s AI  capabilities are gaining broader market recognition, as evidenced by increasing adoption of the ERNIE humanoid robot. 

The company’s robotaxi service “Apollo Go” has achieved another milestone with its sixth-generation autonomous vehicle RT6, which is now operating on public roads across multiple Chinese cities, he added.

Rides provided by Apollo Go's fully driverless vehicles accounted for over 70% of total rides nationwide in the third quarter, rising further to 80% in October.

"Despite the near-term pressures, we remain steadfast in our AI-focused strategy and are confident in our long-term trajectory," Li said.

Interim CFO Junjie He said core operating margins remained stable as the company managed to further optimize costs and realized cost efficiencies between business units.

NVDA sentiment and message volume November 21, 2024, as of 10:35 am ET | Source: Stocktwits

On Stocktwits, retail sentiment toward Baidu stock stayed 'bullish’ (61/100), with message volume spiking to 'extremely high.'

Baiidu was among the top 10 trending stocks on Stocktwits on Thursday.

Some retailers on the platform lamented over the company’s lack of shareholder return policy. Others said the stock is undervalued.

Baidu's ADS listed on Nasdaq fell 6.98% to $80.69. It is down more than 27% so far this year amid the fundamental woes and general caution toward Chinese stocks.