(Bloomberg) -- Baidu Inc. shares jumped more than 12% on Friday after the Chinese internet search leader posted a surprise quarterly revenue gain, reassuring investors spooked by the impact of Covid lockdowns.
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Sales nudged 1% higher in the January-March quarter, as efforts to expand in areas such as cloud computing and autonomous driving offset weak ad sales hurt by Covid outbreaks and lockdowns. Baidu’s Netflix-style streaming affiliate iQiyi Inc. also posted its first quarterly net income since its 2018 listing, after carrying out aggressive cost control measures.
Baidu is trying to pivot from its core online marketing business to reinvent itself as a supplier of deep tech, by expanding into self-driving systems, cloud computing and chips. The country’s weakening economy, coupled with Covid lockdowns in cities like Shanghai and Beijing, has hammered advertising spending and other consumer activity. That’s given new urgency to Baidu’s push to monetize its artificial intelligence tech.
Online marketing revenue shrank 4% during the March quarter while AI cloud businesses expanded 45%.
Baidu is preparing to launch a fully driverless ride-hailing platform in China in 2023, after nabbing a first-of-its-kind testing license from regulators in April. The company has said it plans to expand the robotaxi service into 100 cities across the country by 2030. It’s also looking to raise about $300 million in a new financing round for its AI chip spinoff Kunlun, Bloomberg News reported, to tap more external clients.
For now, Baidu is counting on its flagship search-feed app and streaming affiliate iQiyi to retain users and advertisers.
While Beijing’s attempts to open up the country’s internet ecosystem and deflate its most powerful tech giants may benefit Baidu, it’s fighting an uphill battle against more addictive social media offerings from Tencent Holdings Ltd. and ByteDance Ltd.
Baidu logged sales of 28.4 billion yuan ($4.2 billion) for the three months ended March, compared with the 27.9 billion yuan forecast by analysts. Net loss was 885 million yuan, partly due to a 3 billion yuan one-time loss from long-term investments, versus an estimated profit of 142 million yuan.
The company has stopped giving revenue guidance since the October-December quarter, citing common practice among other US-listed companies on the Hong Kong Exchange.
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