Baidu stock tumbled Tuesday despite the Chinese internet search giant reporting fourth-quarter earnings and sales ahead of expectations. The tech giant's AI push is gaining momentum, the company said, but the advertising business that provides the majority of Baidu's sales posted another slow quarter.
Baidu said that it earned an adjusted 19.18 yuan per American depositary share on sales of 34.1 billion yuan, or $4.7 billion, for the December-ended quarter. Analysts polled by FactSet projected the Beijing-based company would post adjusted earnings of 14.37 yuan per share on sales of 33.3 billion yuan.
Sales fell 2% year-over-year while adjusted earnings decreased 12% year-over-year.
"2024 marked a pivotal year in our ongoing transformation from an internet-centric to an AI-first business," Chief Executive Robin Li said in a news release. "AI Cloud gained momentum, fueled by broad market recognition of our full stack AI capabilities."
On the stock market today, U.S.-listed Baidu fell 7.5% to close at 90.16. While U.S. trading was closed Monday for Presidents Day, Hong Kong-listed Baidu stock fell yesterday after Chinese President Xi Jinping held a meeting with the country's tech leaders that media accounts said did not include Li or other Baidu representatives.
Baidu Stock: AI Showdown With Alibaba, Tencent
Baidu has focused on offering AI features as the digital advertising market that drives that majority of its revenue has struggled. Online marketing revenue fell 7% year-over-year to 17.9 billion yuan, or $2.46 billion.
Non-marketing revenue increased 18% year-over-year to 9.8 billion yuan for Baidu, which the company credited to its AI cloud business.
Baidu announced last week that it will offer its ChatGPT-style Ernie AI chatbot for free starting April 1. It was the latest move in a battle for AI leadership among Chinese companies that includes tech giants Alibaba and Tencent, as well as startups like DeepSeek.
Baidu's operations include China's top internet search engine, a cloud services business and a self-driving car division.
Coming into earnings, Baidu's U.S. shares had gained 16% so far this year — rebounding off a low after a multiyear slide.
But Baidu stock has a so-so IBD Composite Rating of 74 out of best-possible 99, according to IBD Stock Checkup.
The stock has formed a consolidation pattern with a 116.25 buy point, as identified by MarketSurge. Shares fell back below Baidu's 200-day moving average after rallying above the long-term trendline late last week.
