Despite US export restrictions on advanced AI chips, Chinese tech giant Baidu is well-prepared with a substantial reserve of artificial intelligence chips, ensuring its resilience against immediate impacts. Baidu’s CEO, Robin Li, assured analysts that the company’s chip stockpile and alternative strategies would sustain its AI projects, such as upgrading the Ernie large language model, for up to two years, minimizing the near-term impact of US sanctions.
Baidu reported robust third-quarter results, exceeding analyst expectations with revenue reaching 34.45 billion yuan ($4.7 billion), reflecting a 6% year-on-year increase. The positive financial report led to a 1.8% rise in Baidu’s US-listed shares during morning trading. The company’s adjusted net income for the quarter was 7.27 billion yuan, a significant 23% YoY increase, with adjusted profit per American Depositary Share (ADS) at 20.4 yuan, surpassing analysts’ estimates.
The revenue growth was fueled by increased spending on online consumer advertising, aligning with China’s projected economic growth of 5.4% for the year. Online marketing revenue for Q3 rose by 5% to 19.7 billion yuan, reinforcing Baidu’s position in the advertising sector.
While Baidu’s AI cloud revenue experienced a 2% YoY decline in Q3 due to weak demand in smart transportation projects, CEO Robin Li expressed confidence in a positive fourth quarter, anticipating increased demand for the company’s generative AI services.
Although Li did not disclose specific alternative chips being explored, he emphasized Baidu’s “unique AI architecture and strengths in algorithm,” which, despite potential limitations compared to advanced US chips, would enhance efficiency. Baidu’s strategic move to order domestically-made AI chips from Huawei in August, as previously reported by Reuters, highlights the company’s proactive approach to navigate the challenges posed by chip restrictions.
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