Chinese search engine giant Baidu (9888) saw its net profit expand 17 percent year-on-year to 23.76 billion yuan (HK$25.38 billion), partly driven by its AI cloud business.
But the intensifying global AI race may add uncertainties to the tech leader’s outlook.
In 2024, Baidu’s total revenues edged down by 1 percent from the year prior to 133.1 billion yuan.
Among core businesses, online marketing services saw its revenue decrease by 3 percent to 73 billion yuan and its online video platform iQIYI posted a drop in revenue of 8 percent year-on-year to 29.2 billion yuan.
Income from non-online marketing jumped 12 percent to 31.7 billion yuan, which Baidu attributes to the demand for AI cloud services.
Baidu interim chief financial officer He Junjie said the company’s AI cloud business demonstrated robust momentum with fourth-quarter revenue growth accelerating to 26 percent compared to the previous year.
He added that the company is experiencing near-term pressure, without giving details, but is confident that its strategic AI investments will lead to long-term success.
Baidu’s fourth-quarter revenues and net income beat market estimates.
Revenue for the three months that ended in December shrank 2 percent to 34.1 billion yuan, surpassing an average estimate of 33.4 billion yuan. Net income for the same period amounted to 5.2 billion yuan, exceeding a 3.92 billion yuan projection.
But the company faces multipronged challenges. On search, it is losing eyeballs and advertising dollars to social apps that include Xiaohongshu and ByteDance’s Douyin, while combating an economic downturn.
On the AI front, DeepSeek’s generative AI breakthrough – built on top of open-source models and ultra-low training costs – has undercut Baidu’s yearslong approach to push proprietary technology. Last week, the Beijing-based company made a surprise move to open-source its models. It also integrated DeepSeek’s newest R1 model into its flagship chatbot, mirroring a move by Tencent.
Robert Lea, an analyst from Bloomberg Intelligence, said Baidu’s outlook remains highly challenged, with its AI ventures set to lose money for the next three years.
STAFF REPORTER and BLOOMBERG
