Chinese tech leader Baidu's (9888) first-quarter operating income beat market estimates despite a 20 percent fall, fueled by increasing demand for its artificial intelligence cloud services.

Baidu offset losses in its advertising market by growing its AI Cloud segment, which provides cloud computing, AI-powered solutions, and services to enterprises, and drove revenue.

U.S.-listed shares of Baidu once rose more than 1.4 percent in premarket trading.

The net profit shrank by 8 percent to 6.47 billion yuan (HK$7.03 billion) from one year ago.

The operating income for the search giant amounted to 5.3 billion yuan for the first three months of the year, more than the projected 4.89 billion yuan before earnings announcement.

Revenue in the first quarter also surprisingly rose 3 percent year-on-year to 32.45 billion yuan, beating analysts' average estimate of 30.9 billion yuan, according to data compiled by LSEG.

The non-online marketing revenue jumped by 40 percent year-on-year to 9.4 billion yuan, mainly driven by AI Cloud business.

Baidu's online marketing business, which contributes the majority of its revenue, fell 6 percent to 17.31 billion yuan. Analysts had estimated 17.39 billion yuan.

STAFF REPORTER AND REUTERS

Baidu's first-quarter operating income beat estimates on AI demand surge