Technology

Baidu defies advertising slump with AI revenues and significantly increases profit

Despite declining advertising revenues, Baidu's AI business boosts profits, while the search engine platform taps into new growth areas.

Eulerpool News Feb 23, 2025, 3:11 AM

Baidu doubled its profit in the fourth quarter, despite revenue falling for the third consecutive quarter due to subdued advertising demand. China's leading search engine platform and AI specialist reported on Tuesday a 2.4 percent lower revenue of 34.12 billion yuan (4.70 billion US dollars), significantly exceeding expectations – analysts had expected a decline of around 5 percent. At the same time, net profit rose to 5.19 billion yuan, significantly above the forecast of 3.75 billion yuan.

In light of weak advertising markets, Baidu was able to stabilize its results with the booming AI business. According to interim CFO Junjie He, the AI Cloud business grew by 26 percent, partially offsetting weak online ad revenues. However, the recently introduced AI platform "Ernie Bot," formerly a driving force in China's rapidly expanding AI industry, lost some popularity in January. Competitors like ByteDance ("Doubao") and the emerging DeepSeek gained ground, according to data from a Chinese industry platform.

Baidu remains optimistic: The company reported 1.65 billion API requests daily for Ernie Bot in December and plans to release the AI tool in April for desktop and mobile use—a step that could boost the flagship search engine operation. Additionally, Baidu is increasingly investing in cloud computing and autonomous driving. The company received permits to test its robotaxi service "Apollo Go" on public roads in Hong Kong. This could fuel hopes for new growth drivers alongside the core business of "search ads.

Overall, despite short-term market uncertainties, Baidu registers tailwind from China's policies. Currently, Beijing seems to be focusing more on the tech industry again, after the regime had been critical of large internet companies for years. Nevertheless, the stock price (ADR) fell by 2.2 percent in pre-market trading, which observers attribute to profit-taking.

Discover undervalued stocks with Eulerpool.

Subscribe for $2

News

MSCI stock beats its own index – 8-fold return since 2007

Hardly any investment has been more successful in recent years than the MSCI World, except for the stock of the company that created it: MSCI Inc.

Knife attack on SPD mayor of Herdecke – Iris Stalzer critically injured

The newly elected mayor of Herdecke (NRW), Iris Stalzer (SPD), was found seriously injured in her apartment on Tuesday. According to security sources, the 57-year-old suffered multiple stab wounds and is in critical condition.

German Industry: New Orders Decline Again – Economists Continue to See Negative Trend

The German industry remains under pressure: In August, new orders fell by 0.8% compared to the previous month – the fourth consecutive decline, as reported by the Federal Statistical Office. Analysts, on the other hand, had expected an increase of 1.1%.

Nordex receives wind power orders for 126 megawatts – Share increases slightly

The wind turbine manufacturer Nordex received new orders for six wind farm projects in Germany in September. In total, the order volume comprises 21 turbines with a capacity of 125.7 megawatts, the company announced on Tuesday.

DAX stable despite weak industrial data – France remains uncertainty factor

The DAX shows resilience at the start of the week: Despite once again disappointing order numbers from German industry and ongoing political tensions in France, the leading index remains largely stable. After slight losses on Monday, the DAX closed almost unchanged. On Tuesday morning, it is listed at 24,342 points, only about one percent below the all-time high.