China's Baidu topped market estimates for quarterly revenue and profit on Monday, boosted by strong demand for its cloud computing services that helped offset lingering weakness in its advertising business.
Tech giants in China are benefiting from strong enterprise adoption of artificial intelligence, boosting demand for cloud computing capacity required to train and run AI models. Alibaba , China's No. 1 cloud services provider, also reported strong growth in its cloud business last week.
Revenue from Baidu's core AI-powered business, which consists of the cloud division, AI applications and robotaxi unit, jumped 49% to 13.6 billion yuan ($2 billion), accounting for more than half the company's general business revenue.
"These results confirm that AI has clearly become the primary growth driver of Baidu," Baidu CEO Robin Li said in an earnings call.
The strength in its cloud business has helped the company cushion the blow from declining advertising demand. A prolonged property sector crisis and weak consumer spending have hobbled the Chinese economy, prompting advertisers to tighten budgets.
China's largest search engine operator, Baidu generates roughly half of its revenues from ads on its search platform. Its online advertising business reported total revenue of 12.6 billion yuan in the quarter, down from 16 billion yuan a year earlier.
U.S.-listed shares of Baidu reversed earlier gains and were last marginally down in early trading.
Total revenue in the first quarter ended March stood at 32.1 billion yuan, compared with analysts' average estimate of 31.35 billion yuan, according to data compiled by LSEG.
Net income attributable to Baidu came in at 3.45 billion yuan in the quarter, down sharply from 7.72 billion yuan a year earlier, owing to higher costs and foreign exchange losses.
Excluding one-time items, Baidu posted a profit of 12.06 yuan per American Depositary Share, beating an expectation of 11.57 yuan.
($1 = 6.7975 Chinese yuan renminbi)
