Shares of China’s biggest search engine Baidu were up 3.2 percent in pre-market trading on news of its impressive results. The company reported revenue that surpassed estimates thanks to a growth in the demand for its cloud and artificial intelligence-based offerings.
Total revenue for the second quarter came in at 9.65 billion yuan, or $4.43 billion. This surpassed analysts’ average estimate of 29.30 billion yuan, according to Refinitiv.
Baidu’s core business of advertising grew soft in the quarter but an increase in sign-ups for its cloud services helped the company’s total revenue result. Companies around the world are facing macroeconomic challenges and many of them failed to meet analysts’ expectations for their quarterly results. Businesses in China have had quite a tough time as a result of the zero-Covid policy which left major cities including the financial hub of Shanghai crippled. So far, a handful of Chinese companies that have reported their earnings results failed to meet the expectations of analysts. These companies have cited the current macroeconomic realities alongside the government’s policy on the Covid resurgence as factors that affected their operations. They hope that as the lockdowns in China ease out, so would their results return to at least pre-Covid resurgence states.
Cloud services have been a key driver of growth globally thanks to an increase in the demand for internet applications increase. Baidu, like a handful of other cloud-based companies benefitted from this increased demand for cloud services, alongside its artificial intelligence-based offerings which were also well-sought after in the quarter.
Baidu’s AI Cloud unit was up 31 in the second quarter percent year over year. The Chinese cloud titan reported a net profit of 3.64 billion yuan, or 1.49 yuan per American Depository Share (ADS).