Why BIDU Is Falling Today

Baidu (BIDU) is sinking 7% today after the China-based company reported that its online marketing revenue had fallen 7% last quarter versus the same period a year earlier. However, the company’s overall results did come in above analysts’ average estimates.

BIDU owns and operates an online search engine and has developed an AI chatbot.

A modern internet space with a person using Baidu services on a laptop.

A Look at BIDU’s Q4 Results

The firm’s online marketing revenue sank 7% year-over-year in Q4 to $2.46 billion, but its revenue from other sources jumped 18% YOY to $1.34 billion. The latter increase was caused primarily by the higher sales of the company’s AI cloud unit.

Baidu generated Q4 earnings per share, excluding certain items, of $2.63, well above analysts’ average estimate of $1.85. It reported Q4 revenue of $4.67 billion, compared with the mean outlook of $4.6 billion. Its sales fell 2% versus the same period a year earlier.

The monthly average user base of its Baidu App rose 2% YOY to 679 million.  However, the monthly average user base of the AI-enabled features of its content platform, Baidu Wenku, soared 216% YOY.

BIDU’s Comments and Another Possible Reason for BIDU’s Weakness

“2024 marked a pivotal year in our ongoing transformation from an internet-centric to an AI-first business. AI Cloud gained momentum, fueled by broad market recognition of our full stack AI capabilities,” said CEO Robin Li in a statement.

“Our AI Cloud business demonstrated robust momentum with fourth-quarter revenue growth accelerating to 26% year over year, offsetting the softness in online marketing business,” added Interim CFO Junjie He in a statement.

Li, BIDU’s CEO, reportedly did not attend a meeting of Chinese President Xi Jinping and the country’s top corporate leaders. The news may be contributing to today’s retreat of BIDU stock.

While we acknowledge the potential of BIDU, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BIDU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.