Bloomberg and staff reporter

Baidu (9888) announced a US$5 billion (HK$39 billion) share buyback after reporting better-than-expected revenue, reflecting how its cloud computing service is offsetting an advertising lull during China's economic downturn.

Meanwhile, the company saw its net profit for 2022 increase by 10 percent year-on-year to 20.68 billion yuan (HK$23.54 billion).

In the previous year, the company experienced a minor yearly decline in revenue of 1 percent, resulting in a total revenue of 123.68 billion yuan.

The revenue for the fourth quarter remained consistent with the previous year, totaling 33.1 billion yuan, beating the expectation of 32.1 billion yuan. This can be attributed to the strong performance of the company's advertising, cloud, and artificial intelligence divisions, which caused a 7 percent increase in its US-listed shares during premarket trading.

China's Big Tech firms may be back in spending mode after a year of cost cuts and cautious expansion to shore up the bottom line. Baidu, for its part, is leading a race to create China's answer to OpenAI's red-hot ChatGPT. The Beijing company is planning to roll out "Ernie Bot" and embed the AI in its flagship search services in March, while partners from automakers to news sites declare they'll use Baidu's tool in their businesses.

In other news, dozens of ESG funds sold more than US$1 billion worth of Tencent (0700) shares in the past six months, as concerns about Chinese censorship and regulatory risks grew.

Sustainalytics, an ESG research and ratings company, in late August, downgraded Tencent to the category of "non-compliant" with UN principles. Since then, funds run by AXA Investment Managers, Candriam and Storebrand Asset Management sold their stakes; and among ESG funds in Europe, more than 40 sold Hong Kong-listed shares valued at US$1.2 billion, according to data compiled by Bloomberg.

Meanwhile, Tencent is in talks with Meta to distribute its Meta Quest line of virtual reality headsets in China, sources said. It had ambitious plans to build both virtual reality software and hardware at an "extended reality" XR unit it launched in June last year amid swelling global interest in the metaverse concept of a virtual world.

Baidu’s Q4 revenue was 33.1 billion yuan. Inset, ESG funds offloaded over US$1 billion worth of Tencent shares in the past six months. REUTERS

Baidu in US$5b buyback as profit increases 10pc