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Baidu Second-Quarter Results Miss Street Views Amid Online Marketing Weakness

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Baidu Second-Quarter Results Miss Street Views Amid Online Marketing Weakness

Baidu (BIDU) reported lower-than-expected second-quarter results on Tuesday amid weakness in its online marketing business, even though the Chinese technology firm recorded double-digit growth in its core artificial intelligence-powered operations.

The company's adjusted earnings came in at 7.22 renminbi ($1.06) per American depositary share for the quarter ended June, down from 13.58 renminbi the year before, trailing the FactSet-polled consensus of 9.35 renminbi. Revenue declined 4% to 31.33 billion renminbi, missing the Street's view of 31.78 billion renminbi.

The American depositary receipts of Baidu listed on the Nasdaq fell 5% in the most recent premarket activity.

Revenue in the company's general business decreased 4% year over year to 25.18 billion renminbi. Online marketing services, which accounted for about 52% of the division's top line, recorded a 19% drop in revenue to 13.1 billion renminbi.

"While our online marketing business remains under pressure, the growing momentum in our core AI-powered Business reaffirms Baidu's transition from an internet-centric company to an AI-first company, and strengthens our confidence in our long-term growth potential," Chief Executive Robin Li said in a statement.

Revenue in Baidu's core AI-powered business advanced 25% to 12.5 billion renminbi, buoyed by a 50% jump in the AI cloud infra segment. AI applications rose 3% while AI-native marketing services was flat.

"Going forward, we remain firmly committed to investing in AI as the core driver of Baidu's long-term growth," Chief Financial Officer Haijian He said.

Chinese e-commerce and cloud technology giant Alibaba (BABA) is scheduled to release its quarterly results on Thursday.

In the US technology sector, Alphabet (GOOG, GOOGL) last month reported second-quarter revenue above Wall Street's estimates amid robust AI infrastructure demand, while Meta Platforms (META) provided a weak third-quarter revenue outlook.

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