The analyst conference of Baidu ($9888 (-7,66 %) ) for the fourth quarter and full year 2024 offered exciting insights into the company's development, especially in the areas of generative AI, autonomous driving and cloud computing. CEO Robin Li emphasized that AI investments are now showing their first monetary successeswhereby ERNIE and AI Cloud are key growth drivers. The open source strategy for ERNIE 4.5 marks a decisive turning point in driving the adoption of Baidu's AI technology and hold its own against global competitors.
CFO Junjie He presented the financial results for the fourth quarter of 2024:
- Total revenue:
RMB 34.1 billiona decrease of 2 % compared to the previous year. - Baidu core revenue:
RMB 27.7 billiona slight increase of 1 %. - AI Cloud revenue:
+26 % year-on-year, showing strong growth potential. - Online marketing revenue:
-7% to RMB 17.9 billionburdened by difficult market conditions. - Apollo Go (robotaxi service):
1.1 million rides in the quarter, +36% YoY. - Free cash flow:
RMB 13.1 billionunderlines the financial stability.
While the advertising business declinedBaidu was able to grow in the AI cloud and autonomous driving achieved strong progress. ERNIE's API calls increased by 178 % compared to the previous quarter, underlining the increasing use of generative AI.
For 2025 Baidu sees solid growth in the AI cloud business and expects increasing monetization of its AI search AI search capabilities.
Robin Li presented three central growth areas for Baidu:
- Open source strategy for ERNIE 4.5: By free provision Baidu wants to scale the use of ERNIE and make it easier for developers to compare it with other foundation models models.
- Transforming search through generative AI:
22% of search result pages already contain AI-generated contentwhich increases increases user engagement. - Strong growth in AI Cloud: The increasing demand for Foundation Models will further drive the continue to drive the cloud business in 2025.
Apollo Go, the robotaxi service from Baiduhas already over 9 million trips proven its scalability and is expanding to Hong Kong.
The Q&A session showed that investors are primarily focused on the monetization of AI initiatives, the advertising business and the growth prospects for AI Cloud.
A key topic was Baidu's decision to make ERNIE 4.5 open source. Robin Li explained that models only have commercial value if they are used on a large scale. By making them available free of charge, Baidu hopes to increase their distribution and convince developers of ERNIE's strengths.
Lincoln Kong (Goldman Sachs) questioned how the integration of generative AI into search affects the business model. Rong Luo explained that Baidu is already adding AI-generated content to 22% of its search results pages, which has increased user engagement and search frequency.
Alex Yao (JPMorgan) asked about the advertising outlook for 2025, Luo acknowledged that competition in digital advertising remains high, but Baidu expects a gradual recovery. The long-term goal is to improve the monetization of AI search and personalized ads.
Gary Yu (Morgan Stanley) wanted to know how AI Cloud will develop. Dou Shen emphasized that Baidu AI Cloud expects a strong year in 2025 as companies increasingly use foundation models.
The topic of autonomous driving was also in focus. Xiaomeng Zhuang (Bank of America Securities) asked about the expansion plans for Apollo Go. Robin Li confirmed that Apollo Go is already operating profitably in several Chinese cities and is now expanding to Hong Kong.
Conclusion: Baidu continues to focus heavily on generative AI and AI Cloud, while the advertising business remains under pressure in the short term. The open source strategy for ERNIE 4.5 shows the long-term goal of establishing itself as the leading AI platform in China.
I hope you enjoyed the summary!
