(Reuters) – China’s Baidu Inc beat revenue estimates for the fourth quarter on Wednesday, bolstered by strength in its advertising, cloud and artificial intelligence businesses, sending its U.S.-listed shares up 7% in premarket trading.
The search engine giant, which generates most of its revenue from online ads, is seeing advertisers return after China lifted its zero-COVID policies last year in a boost to the country’s economic prospects.
The company also announced a new share repurchase program of up to $5 billion.
Revenue for the quarter ended Dec. 31 came in at 33.08 billion yuan ($4.80 billion), inching past analysts’ estimates of 32.01 billion yuan, according to Refinitiv data.
Revenue from Baidu Core, which includes search-based ad sales, cloud offerings and its autonomous driving initiatives, fell 1% to 25.7 billion yuan.
While non-online marketing revenue rose 11% to 7.6 billion yuan, driven by AI and cloud businesses, strict pandemic-related controls in China caused the company’s online marketing revenue to drop 6% to 18.1 billion yuan in the reported quarter.
“2022 was a challenging year … in 2023, we believe we have a clear path to re-accelerate our revenue growth, and we are now well positioned to make use of the opportunities that China’s economic recovery offers us,” Baidu’s Chief Executive Officer Robin Li said.
The company’s research and development expenses for the whole of 2022 were 23.3 billion yuan, an equivalent of 18.8% of revenue, as it plans to integrate its hotly anticipated, ChatGPT-like Ernie Bot into Baidu’s mainstream businesses, including search engine, cloud and smart cars.
Baidu’s AI-driven chatbot, seen by many as being at the forefront of China’s efforts to develop a rival to the platform developed by OpenAI and backed by Microsoft Corp, will complete internal testing in March.
“The Chinese AI market is on the verge of experiencing an explosive growth in demand, releasing unprecedented and exponential commercial value,” Li said.
He added that the developers of Ernie Bot were sparing no effort to ensure the chatbot was made available as early as possible.
Li also said during a conference call that Ernie Bot would be first embedded in Baidu’s search engine and that its Chinese-language capabilities were state of the art.
“The generative large-language model we are working on right now will be more suitable in Chinese language and to the China market than models developed overseas,” Li said.
($1 = 6.8963 Chinese yuan renminbi)
(Reporting by Yuvraj Malik in Bengaluru and Eduardo Baptista in Beijing; Editing by Devika Syamnath, Shounak Dasgupta and Tomasz Janowski)