Shares of Baidu (BIDU) declined in pre-market trading after the company’s Q3 revenues missed estimates. The Chinese tech company’s adjusted earnings declined by 19% year-over-year to RMB16.6 ($2.37) per American Depository Share (ADS). This fell short of consensus estimates of $2.41 per share.
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BIDU’s AI Cloud Business Bolstered Its Revenues in the Third Quarter
Furthermore, the company’s revenues declined by 3% year-over-year to RMB33.56 billion ($4.78 billion) in the third quarter. This surpassed Street estimates of $4.6 billion. This was the company’s biggest revenue drop in the past two years.
In addition, the company’s revenues from its core business, which includes its online marketing services, remained flat year-over-year, with online marketing revenue declining by 4% year-over-year to RMB18.8 billion ($2.68 billion). Meanwhile, its AI Cloud business drove its non-online marketing revenues to RMB7.7 billion ($1.10 billion), an increase of 12% year-over-year.
BIDU’s Management Comments on the Q3 Results
Robin Li, Co-founder and CEO of Baidu, commented, “Baidu 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. Our strong AI capabilities are gaining broader market recognition, as evidenced by increasing adoption of ERNIE.”
In fact, the company’s Ernie chatbot now handles an impressive 1.5 billion daily queries.
BIDU Launches Apollo Go Across Multiple Cities
Furthermore, the company announced the launch of its Apollo Go driverless taxis across multiple cities in China, now accounting for over 70% of total rides in China. Additionally, Apollo Go provided 988,000 rides in the third quarter, up 20% year-over-year.
Is Baidu Stock a Buy Now?
Analysts remain bullish about BIDU stock, with a Strong Buy consensus rating based on 13 Buys and three Holds. Over the past year, BIDU has declined by more than 20%, and the average BIDU price target of $124.16 implies an upside potential of 43.1% from current levels. These analyst ratings are likely to change following BIDU’s results today.
