Baidu (NASDAQ:BIDU) stock is in the red after the Chinese search engine and artificial intelligence (AI) company reported fourth-quarter earnings. For the period, revenue rose by 6% year-over-year (YOY) to 34.95 billion yuan, or $4.92 billion, just barely below the analyst estimate for 34.97 billion yuan. Adjusted diluted EPS was 21.86 yuan, beating the estimate for 17.87 yuan. Baidu app’s monthly average users (MAUs) increased by 3% YOY to 667 million as well.
“Throughout 2023, we made significant strides in advancing ERNIE and ERNIE Bot, reinventing our products and services, and achieving breakthroughs in monetization,” said co-founder and CEO Robin Li. “Concurrently, our core business remained resilient and healthy. Looking ahead, our commitment to Gen-AI and foundation models remains unwavering, paving the way for the gradual creation of a new growth engine.”
Meanwhile, operating oncome increased by 17% to $759 million, although net income fell by a significant 48% to $366 million. This was largely due to a rise in share of losses from equity method investments. Adjusted net income, which doesn’t include non-recurring expenses, rose by 44% to $1.09 billion.
BIDU Stock: What’s Next for the AI Company?
Baidu is best known for being China’s largest search engine. In recent years, the company has placed an emphasis on AI in the form of a chatbot called Ernie Bot. Ernie goes hand in hand with its existing search engine.
Baidu didn’t provide guidance for Q1 or for the year. Still, analysts expect Q1 revenue of $4.55 billion, implying YOY growth of 5.14%. GAAP EPS is expected to be $1.85, while adjusted net income is forecast to be $756 million, signaling a YOY decline of 4.95%.
“As we look ahead into 2024, our goal is to persistently enhance operational efficiencies and achieve high-quality growth,” said Chief Financial Officer Rong Luo.
For 2024, revenue is forecast to be $20.34 billion, up by 8.76% YOY. Baidu is expected to be way in the profit with a GAAP EPS of $8.67.
2024 will be an interesting year for Baidu as it tackles the balance between AI spending and growth. BIDU stock has lost about 9% so far this year.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
