Baidu (NASDAQ:BIDU) shares dropped about over 5% on Thursday after the Chinese tech giant reported a slight revenue decline in the third quarter, though the results exceeded analyst expectations.
For the quarter, Baidu posted revenue of 33.56 billion yuan ($4.64 billion), surpassing the 33.43 billion yuan estimated by analysts. Despite the 3% year-over-year revenue drop, net income surged by 14% to 7.63 billion yuan, far exceeding the Street consensus estimate of 4.67 billion yuan.
The company attributed much of its growth to a 12% increase in non-online marketing revenue, which reached $1.1 billion. This segment was driven by Baidu’s expanding AI-powered cloud computing business, a key area of focus as the company diversifies beyond its core internet search and mapping services.
In the artificial intelligence space, Baidu has emphasized its Ernie chatbot as a domestic competitor to OpenAI’s ChatGPT, which remains unavailable in China. Baidu revealed that Ernie now has 430 million users, highlighting its rapid adoption.
The mixed results reflected ongoing challenges in Baidu’s online marketing business, which continued to face headwinds, partially offset by strong growth in its AI Cloud segment.