- Baidu beat Wall Street's revenue estimates for its fourth fiscal quarter.
- Shares of the Chinese search giant jumped in pre-market trading but tumbled as the market opened.
Baidu posted upbeat fourth-quarter earnings results this week, briefly sending shares of the company up 7% in pre-market trading on Thursday.
Shares pared gains though, tumbling 4% shortly after the opening bell to around $135.07.
The search engine giant delivered higher-than-expected revenue for the last three months of 2022. Baidu notched $4.8 billion in revenue, versus analysts' estimates of $4.7 billion, according to FactSet. Additionally, Baidu's quarterly adjusted net profit surged 32% from the same period last year at $779 million.
The Chinese company, which garners a lot of its revenue from online ads, is seeing advertisers return after the country's government lifted its zero-COVID policies last year. Baidu also in part cited cost-saving efforts for its successful quarter.
Goldman Sachs gave Baidu a buy rating in a Tuesday note to clients, though it noted risks ahead for the company.
"Slower recovery in macro and advertising spending, higher-than-expected competition in the advertising/search industry, worse-than-expected investment spending, slower-than-expected progress in EV launch, delay in major autonomous driving milestones," the bank wrote.
The company's board of directors authorized a new $5 billion share buyback program, through the end of 2025.
"2022 was a challenging year...In 2023, we believe we have a clear path to reaccelerate our revenue growth, and we are now well positioned to make use of the opportunities that China's economic recovery offers us," Chief Executive Officer Robin Li said.
On Wednesday, Baidu provided more details about its artificial intelligence chatbot, called ERNIE, in an internal company memo. ERNIE will be integrated with a number of Baidu's businesses, including cloud-computing services, its search engine, and smart cars. This will launch next month, according to a Barron's report.
"The Chinese AI market is on the verge of experiencing an explosive growth in demand, releasing unprecedented and exponential commercial value. Baidu stands as the best example of the long-term growth of China's AI market," Li said in the letter.