Baidu.com (NASDAQ:BIDU), the Chinese search engine and artificial intelligence group listed on Nasdaq, rose nearly 5% in premarket trading on Monday after first-quarter results showed its fast-growing AI cloud business more than offsetting a sharp decline in its traditional advertising revenue.
The company earned an adjusted $1.67 per American depositary share for the March quarter, beating analyst forecasts of $1.60, while revenue of $4.7 billion also came in ahead of the $4.6 billion consensus despite falling 2% year on year.
The standout figure was AI cloud infrastructure revenue, which climbed 79% to $1.3 billion as enterprise customers ramped up spending on Baidu's computing services.
Chief executive Robin Li said AI-powered services exceeded half of Baidu's general business revenue for the first time, calling it "a clear signal that AI has become the core driver of Baidu".
The shift matters because Baidu's legacy search advertising business, long its primary revenue source, continued to deteriorate, with online marketing services revenue falling 22% to $1.8 billion as the broader Chinese economy weighed on ad spending.
Baidu was among the first major Chinese technology companies to pivot towards generative AI, launching its ChatGPT-style chatbot Ernie in late 2023, and has been competing with Alibaba and Tencent for both consumer users and enterprise cloud contracts.
The stock remains well below the highs it reached in 2021, but has gained more than 50% over the past 12 months as confidence in the AI transition has grown.
Shares briefly jumped nearly 8% last week on optimism around the Trump-Xi summit in China, though those gains faded after the meeting ended without a significant deal.