Baidu stock dropping on flat revenue, China's econ slowdown

Baidu (BIDU) shares are dropping in pre-market trading after reporting mixed second quarter earnings, namely its revenue coming in flat.

Seana Smith and Brad Smith comment on the challenges Baidu and other e-commerce platforms are facing as they transition into AI during China's own economic downturn.

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This post was written by Luke Carberry Mogan.

Transcripción del vídeo

Take a look at Baidu, the Chinese internet giant reporting relatively flat second quarter revenue, economic conditions in China, China weighing on advertising spending, China's economy, still recovering from that property slump that we've been talking a lot about.

And that actually prompted advertisers to tighten their budgets.

Not necessarily huge surprise, you're looking at declines of just about 2%.

And also remember that this is consistent with some of the Chinese e commerce giants or Chinese giants that we have heard from so far this earnings season just in terms of the tough times, challenging times that they are up against now.

For Baidu specifically, it's a bit of a different story.

Yes, they are struggling with the sluggishness within the Chinese economy, obviously that is weighing on their business.

But also remember that they are transitioning from search ads to A I and they're doing this during the economic downturn within China.

They have seen some traction when it comes to Ernie their large language model, but it's not offsetting those I guess troubles elsewhere there.

So I think the question is for investors, how long this transition is going to take and whether or not Baidu is going to be able to regain momentum before the end of the year.

Yeah, they're really trying to speed up the A I native transformation of their products and, and they talked about this in the second quarter as well, really pivoting a lot of their operations towards that effort with things like Ernie Bot.

You've also got the expansion that they're talking about within this A I cloud of what they call paddle paddle.

I didn't know too much about that going into this quarter.

But now we've got a little bit more of an update, the developer community and this is what it's gonna enjoy.

The developer community can continue to continuing rather to lean into how they can leverage these language learning models build on top of them and ultimately put out more applications because let's remember, it's the applications that sit on top of the models that sit on the top of the chips there.

So all of these things considered the developer community growing to 14.7 million as of June 2024.

So we'll continue to track that very closely as well.