BIDU's GPU Cloud Revenue Soars 283% In Q2 — CEO Says AI Business Is Now 'Firmly Established As The Core'

• Baidu CEO Robin Li said the company’s AI Applications portfolio “continued to flourish, with stronger capabilities and increasingly diverse use cases.”
• The company also continued to add AI-powered features to Baidu Wenku and Baidu Drive, including upgrades to GenFlow.
• Li acknowledged that the advertising business continues to remain under pressure, but remained optimistic about the AI business.

Shares of Baidu Inc. (BIDU) were in focus on Tuesday after the company’s second-quarter results missed expectations, with CEO Robin Li saying that Baidu’s AI business continues to gain momentum despite coming off a high base in the first quarter.

Baidu reported a 283% year-on-year surge in GPU Cloud revenue during the second quarter (Q2), with the AI business accounting for half of the company’s General Business revenue.

“With AI-powered Business now firmly established as the core of Baidu, we are strengthening the foundations for our next phase of AI-driven growth,” said Li.

Baidu’s American Depositary Receipts were down more than 5% in Tuesday’s pre-market trade. BIDU was among the top trending tickers on Stocktwits at the time of writing.

BIDU’s AI Cloud Infra Revenue Rises 50% As Applications Expand

Revenue from Baidu’s AI Cloud Infrastructure business rose 50% YoY to RMB7.3 billion ($1.08 billion) in Q2. The company said GPU Cloud growth reflected “mounting demand for public cloud-based AI computing.”

Revenue from AI Applications was RMB2.5 billion, up 3% year over year. Baidu launched an enterprise edition of DuMate, its general-purpose agent for everyday productivity, in June.

The company also continued to add AI-powered features to Baidu Wenku and Baidu Drive, including upgrades to GenFlow. Daily active user penetration across the two AI products increased 27.4% YoY in June.

Li said the company’s AI Applications portfolio “continued to flourish, with stronger capabilities and increasingly diverse use cases.”

BIDU Misses Q2 Expectations On Weakness In Ads Business

Baidu missed Wall Street’s expectations in Q2, with earnings per ADR of RMB7.22 on revenue of RMB31.33 billion. According to Fiscal.ai data, the consensus estimate was for earnings per ADR of RMB9.84 on revenue of RMB31.95 billion.

The advertising business registered a 19% YoY decline in revenue to RMB13.1 billion during the quarter. Li acknowledged that the advertising business continues to remain under pressure, but remained optimistic about the AI business.

“While our online marketing business remains under pressure, the growing momentum in our core AI-powered Business reaffirms Baidu's transition from an internet-centric company to an AI-first company, and strengthens our confidence in our long-term growth potential,” he said.

BIDU’s Apollo Go Expands Into New Markets

Baidu’s autonomous robotaxi service, Apollo Go, continued its global expansion during the quarter. In London, the service began open-road testing in partnership with Uber Technologies Inc. (UBER) and Lyft Inc. (LYFT). In Dubai, it launched fully driverless commercial operations, with rides available through Uber and its own app.

Apollo Go received Hong Kong’s first permits for fully driverless testing and began testing on Airport Island.

Apollo Go’s global footprint reached 28 cities during the quarter, with its fleets accumulating more than 350 million autonomous kilometers, including more than 240 million fully driverless autonomous kilometers.

How Retail Traders Reacted To BIDU Stock

Retail sentiment on Stocktwits around Baidu was in the ‘bullish’ territory, with message volumes at ‘extremely high’ levels at the time of writing.

BIDU ADR is down 21% year-to-date, but up 16% over the past 12 months. The MicroSectors FANG+ ETN (FNGS) is up 19% over the past 12 months, while the Invesco Golden Dragon China ETF (PGJ) is down 18%.

Exchange Rate: RMB1 = $0.15

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