The Baidu Inc (NASDAQ: BIDU) stock price increased after its Q3 earnings report was released. The Chinese tech company generated RMB 32.54 billion (US$4.574 billion) in revenues during the quarter representing a 2% increase to last year’s figures and a 10% increase to the figures reported in Q2 2022.
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The company’s operating profits rose 130% to RMB 5.317 billion (US$747 million) In Q3 compared to Q3 2021. However, the profit represented a 56% increase to the RMB 3.4 billion recorded in Q2 2022.
The upbeat numbers pushed Baidu ADRs higher during premarket trading, but the stock’s gains were negligible as investors remained unconvinced about its prospects. It was impressive to see the company report an improvement in revenues and profits despite the negative impact of the zero-COVID policies on most Chinese businesses. ‘
The muted reaction could also reflect the market’s uncertainty about Chinese government policies after President Xi Jinping secured a third 5-year term as the most powerful Chinese leader since Mao Zedong.
However, investors remain optimistic that the recent meeting between President Joe Biden and his Chinese counterpart Xi Jinping will help cool down tensions between the two countries, which should boost Chinese tech businesses.
Baidu expressed confidence that its core business would continue growing, driven by the recovery in online marketing within the country and the surging demand for its AI Cloud infrastructure.
The core advertising and search businesses will continue generating free cash flow to fund Baidu’s other businesses, including its AI Cloud and intelligent driving businesses. In addition, the company’s Appollo auto solutions continue to find greater adoption by automakers.
The Appollo Go Robo-taxi service also expanded its reach after completing 474,000 rides during the quarter and is forecast to keep growing. China remains a leader in the autonomous driving industry due to its vast network of cameras on roads and public spaces, with many other countries lagging.
Baidu’s multiple businesses remain on a growth path, but its share price gains will continue to be affected by factors beyond its control.
*This is not investment advice.
Baidu stock price.
The Baidu stock price edged 1.52% higher premarket to trade at $96.00, rising from Monday’s closing price of $94.56.
