To The Moon

Just now, $Baidu(BIDU)$ $BIDU-SW(09888)$ released third quarter results, which exceeded expectations, and its share price rose nearly 3% premarket:

The earnings report exceeded analysts' expectations, but like the second quarter results, the stock price reaction was not strong, and if you look at the trend throughout the year, Baidu has completely reduced all the gains brought by AI!

This can only show one thing, AI in Baidu only hype value, and investors are not optimistic about Baidu to be able to return to the peak. From the third quarter results, Baidu is also the case.

First of all, Baidu's revenue in the third quarter was 34.447 billion yuan, slightly exceeding analyst expectations of 34.2 billion yuan, but the year-on-year growth rate was only 5.9%. Considering the domestic pandemic was raging in the third quarter of last year, Baidu's revenue was at a low point, and now the pandemic prevention policy is completely canceled, the growth rate is less than 6%, which shows that Baidu is not having a good time:

By business, Baidu's online marketing service revenue was 21.346 billion yuan, slightly exceeding analyst expectations of 21.16 billion yuan, but the year-on-year growth rate is only 7%, and the year-on-year growth rate of the third quarter of last year was -5.3%, so the 7% year-on-year growth is not surprising.

Others business revenue was 13.1 billion yuan, slightly exceeding analysts' expectations of 12.97 billion yuan, but the year-on-year growth rate is only 4%, hitting a new low in the last three years:

With revenue slightly exceeding expectations, Baidu's profit in the third quarter exceeded expectations, including adjusted net profit of 7.27 billion yuan, much higher than analysts expected 6.28 billion yuan:

This is related to the cost reduction and efficiency strategy implemented by Baidu, but it is also related to a large number of fair value changes in the third quarter, compared with a huge loss in the same period last year, resulting in a big increase in net profit.

Although the growth rate of net profit is relatively high, Baidu's gross profit margin and operating profit margin have still improved, the profit growth rate is indeed better than revenue, and the cost reduction and efficiency increase are indispensable:

However, reducing costs and increasing profits is an old operation of Chinese stock in the past two years, the market is not strange. Considering Baidu as an Internet giant, the growth rate is more important.While in last quarter financial report, the company did not disclose the specific amount of revenue brought by AI, only saying that it is optimistic about the future drive of AI to its core business.

Considering the trend of developing large AI models in China, Baidu founder Robin Li also publicly shouted some time ago, saying that there is no need to waste resources to make a large model, the implication is that Baidu is the best, and others do not make much sense.

Although repeated investment is known as involution in China, the large model involves the key battle in the future, $TENCENT(00700)$ $Tencent Holding Ltd.(TCEHY)$ $Alibaba(BABA)$ $Alibaba(09988)$ and other big company will continue to invest huge amounts, Baidu will still face fierce competition.

Several months after the launch of the large model, investors have not yet seen the driving role of Baidu. If it is slow to respond to the financial data, Baidu's so-called AI lead will be falsified!

Baidu, which lives on old capital, the old business is declining, and the new business cannot form a second growth curve, may be abandoned by investors.

Let's take a look at how management describes the role of AI in helping the business at the earnings meeting, and it is best to have a specific amount to enhance investor confidence.