China’s Struggling Economy Didn’t Phase Baidu

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What's going on?

Chinese internet giant Baidu reported better-than-expected quarterly results on Tuesday.

What does this mean?

Baidu – the company behind China’s biggest search engine – usually makes a lot of its money from digital marketing, but China’s struggling economy is hardly encouraging businesses to splash the cash. Baidu’s online marketing sales fell 12% last quarter from the year before as a result, a trend also clear in rival Tencent’s results earlier this month.

So Baidu will be feeling extra grateful for its cloud business, which grew its revenue by 31% from the same time last year on the back of steadily rising demand for internet applications. So sure, Baidu’s overall revenue dropped for the first time in two years, but the 5% dip was still better than analysts feared. Then sprinkle in some increased profit margins here – “here” being Baidu’s Netflix-esque video service iQiyi – with some cost cuts there, and Baidu’s profit came in a whopping 63% higher than expected.

Why should I care?

The bigger picture: No more awkward cab chats.
Baidu’s newer ventures could help it further offset that sluggish core advertising business in the future. The internet giant’s doubling down on self-driving technology, for one, having invested heavily into the sector over the past five years. It’s been a good ride so far: Baidu’s “Apollo Go” driverless robotaxis completed nearly 300,000 rides last quarter, and it secured a permit this month that’ll let it operate without on-board safety supervisors for the first time ever in China (tweet this).

Zooming out: Buffett’s driving change.
Warren Buffett’s going driver-free too, with Pilot Co. – the Berkshire Hathaway-owned truck stop operator – agreeing to take a stake in driverless truck startup Kodiak Robotics last week. That could be a savvy move: the existing pool of truck drivers is shrinking and aging, so driverless solutions could help alleviate that shortage, bring down costs, and even improve safety too.

Originally posted as part of the Finimize daily email.

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