April 27, 2018 / 5:01 AM / 8 months ago

Breakingviews - Baidu's revival adds speed to China's AI race

Qi Lu, vice chairman, group president and COO of Baidu, responds to a question during a panel discussion on 5G wireless broadband technology during the 2018 CES in Las Vegas, Nevada, U.S. January 10, 2018. REUTERS/Steve Marcus

HONG KONG (Reuters Breakingviews) - Baidu’s revival is accelerating China’s AI race. Quarterly earnings at China’s search giant topped $1 billion, trouncing expectations. Sales at its listed video arm, iQiyi, also jumped. Baidu may have been eclipsed by rivals like Alibaba, yet progress in autonomous driving is giving it an early lead in tech’s next battlefield.

The Beijing-based group has rebounded from tough new rules on online advertising. Sales from its core search-engine and news-feeds business were better than expected at 16 billion yuan, or $2.5 billion, in the three months to March, up 19 percent from a year earlier. Baidu’s Netflix-like video unit, which recently debuted in New York, also helped: revenue from iQiyi jumped 57 percent year-on-year in the quarter, to 5 billion yuan, mostly thanks to the group’s latest hit reality singing show, “Idol Producer”.

The turnaround is much needed by the $80 billion group, which is part of China’s trio of internet giants including Alibaba and Tencent, or the BAT. But legal woes and costly distractions like food delivery have hurt. Over the past year, Baidu investors have seen a 28 percent annualised total return, far less than the roughly 60 percent and 50 percent peers Tencent and Alibaba have delivered to their shareholders respectively.

A stronger core business will power Baidu’s ambitious artificial-intelligence bets. These initiatives are primarily led by former Microsoft executive Qi Lu, who has been pushing into areas like smart home speakers, translation software and self-driving cars, where competition is fierce.

There are already signs that the company may be actually pulling ahead of Tencent and Alibaba, which have market values more than five times that of Baidu. The company received the official go-ahead to test its autonomous vehicles in three major Chinese cities earlier this year. Baidu has also partnered with major carmakers like BYD to mass produce self-driving cars powered by Baidu software in as early as two years. A nimbler, more focused Baidu looks back in the running.

Breakingviews

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