With AI Being So Popular, How Much Has Baidu Actually Earned?
-
In the AI era, Baidu has attracted significant attention.
On February 28, 2024, Baidu released its latest financial report. The Q4 2023 revenue reached 34.951 billion yuan, marking a 6% year-on-year growth, while net profit stood at 7.755 billion yuan, up 44% year-on-year. For the full year of 2023, Baidu's revenue totaled 134.598 billion yuan, a 9% increase year-on-year, with net profit reaching 28.7 billion yuan, up 39% year-on-year.
In terms of growth rate, net profit has far outpaced revenue. Behind the financial report, how far has Baidu's AI commercialization progressed? What does the change in Baidu Search's leadership really mean? Can AI e-commerce become the key lever for Baidu to rebuild its competitiveness?
AI has always been the foundation of Baidu.
As early as 2016, "consolidating the mobile ecosystem and winning the AI era" became Baidu's core strategy, at a time when external attitudes towards AI were not optimistic.
The reality has indeed been so—how to implement AI has always been a perennial topic in the internet industry. With the emergence of ChatGPT, major global internet players have entered the field, making AI a key variable in the internet competition.
After years of persistence, Baidu sees the dawn of AI.
To seize this historic opportunity, Baidu is determined to reconstruct its products and services with an AI-native mindset, aiming to secure a leading position in the AI era. "In 2023, we achieved major progress in iterating the ERNIE model and ERNIE Bot, reconstructing products and services, and commercialization," said Robin Li.
Public data shows that as of the end of December 2023, ERNIE Bot had over 100 million users, cumulatively completing 3.7 billion words of text creation and outputting 300 million lines of code. The daily API calls for the ERNIE model exceeded 50 million, with a quarter-on-quarter growth of 190%. The Baidu PaddlePaddle platform has attracted 10.7 million developers, who have created 860,000 models on PaddlePaddle and served 235,000 enterprises and institutions.
However, the transition between old and new dynamics takes time.
Baidu Intelligent Cloud's operating revenue in the fourth quarter of 2023 was 8.4 billion yuan, with the large model contributing approximately 660 million yuan in incremental revenue to the cloud business, indicating significant potential for further growth. For Baidu, 2024 is a pivotal year: the strong start in large language models will test the true potential of its AI capabilities and the premium the capital market is willing to assign.
"Dolphin Research" notes: "From a performance perspective, Baidu's current valuation still largely depends on the macroeconomic environment and competition for user traffic among platforms. AI is the decisive factor in whether Baidu's valuation can regain its vitality."
2023Q4 Performance In response to this, Baidu's solution is to 'focus on applications.'
'We must concentrate on developing AI-native applications. Only by achieving this can the models have value,' said Robin Li. He believes that large models are not an opportunity for the majority of people. 'In the AI-native era, we need a million AI-native applications, but not a hundred large models.'
In short, Baidu believes that the ultimate goal of large models is AI-native applications. At present, AI has yet to produce a killer app. Whoever can secure a 'ticket' to the next phase first will not only gain greater industry influence but also determine their future position in the AI ecosystem.
In other words, Baidu's AI commercialization efforts now have more potential.
To drive AI transformation, Baidu has recently made adjustments to its organizational structure and executive team. On one hand, Baidu Wenku has upgraded.
The underlying logic of 'application competition' is 'efficiency is king', aiming to make work simpler, learning easier, and life better.
After evolving into a 'one-stop intelligent document platform', Baidu Wenku is not just a content platform but also a creation platform, venturing into office and learning fields, leading the charge in the 'efficiency is king' front. Against this backdrop, Baidu Wenku's business department has been upgraded to a BU (Business Unit). Baidu Vice President Wang Ying will continue to serve as the head of Wenku BU and will receive more resources and support.
An insider revealed: "The upgrade of Baidu Wenku to a BU signifies that they will be tasked with certain profit and user growth targets in 2024."
Institutional ratings of Baidu
On another front, Baidu Search undergoes a leadership change. Search, regarded as Baidu's fundamental business, is famously known as its 'cash cow', and 'search + information feed' serves as the cornerstone of Baidu's mobile ecosystem, underscoring its undeniable significance.
It's no exaggeration to say that no player can challenge Baidu's dominant position in the search field.
However, with the advent of the AI era, subtle changes have emerged. Generative search is gaining traction, while traditional keyword-based search is facing challenges, prompting potential competitors to gear up for the competition. For example, after integrating ChatGPT into Bing, Microsoft renamed it to Microsoft Bing, playing the AI card in an attempt to break out of its marginalized predicament and reshape its status and image.
Baidu's countermeasure was to embed "ERNIE Bot", allowing search results to also display generative content, adopting a dual approach of "keyword search + generative search".
From a practical perspective, Baidu's dominant position in the domestic search market remains unchanged. Nevertheless, Baidu cannot afford to be complacent, as its potential competitors are formidable, with Xiaohongshu standing out as particularly noteworthy and deserving of high vigilance.
Xiaohongshu specializes in intelligent decision-making search. Its "Direct Search" feature can reach potential consumer groups, enabling brands to promote content effectively from the outset.
The 2024 Xiaohongshu Search Promotion White Paper reveals that Xiaohongshu has 260 million monthly active users (MAUs). Among these, 70% engage in search behavior, with 88% of searches initiated by users themselves. Notably, 90% of users admit that their purchasing decisions are influenced by Xiaohongshu search results, and a staggering 42% of new users utilize the search function on their first day of using the platform.
It is evident that Baidu can no longer proceed with business as usual—it must innovate or risk being replaced. For this purpose, Zhao Shiqi, Robin Li's 'personally trained disciple', has returned to take charge of the search platform, with leaders from all search departments now reporting to Zhao Shiqi.
As a technical expert, Zhao Shiqi is highly regarded by Baidu and entrusted with the crucial task of maintaining Baidu Search's leading position in the AI era.
In fact, Baidu foresaw the power of 'search + consumption' early on, viewing it as a key driver for AI implementation. In May 2023, Baidu officially launched its e-commerce brand 'Baidu Youxuan,' attempting to leverage AI to create a 'search-recommend-shop' one-stop shopping decision platform.
He Junjie, General Manager of Baidu's Mobile Ecosystem Business Group, stated: 'Based on the traffic entry points of Baidu APP and Baidu search, Baidu's e-commerce has unique advantages. The Baidu platform receives billions of search requests daily, where users consume content and conduct online transactions while searching for information. The e-commerce industry has already become an important part of Baidu's mobile ecosystem.'
In fact, AI-powered e-commerce has become an industry consensus. For instance, through the application of large models, Pinduoduo can provide intelligent recommendations and virtual customer service, enhancing the shopping experience and sales conversion rates. Additionally, it can manage supply chains, predict inventory, and forecast sales, thereby improving operational efficiency and management levels.
Another example is JD.com's AI shopping assistant 'Jingyan,' which offers users professional category consultations, personalized gift recommendations, and product comparison tools to help them make better purchasing decisions.
This means AI is reshaping e-commerce productivity. Baidu Preferred Choice
At the 'AI Reshaping E-commerce' ecosystem conference in January 2024, a set of data was disclosed: 'Baidu Preferred Choice' achieved a 594% year-on-year growth in GMV in 2023, with the number of active users and merchants increasing by 4 times and 3 times respectively. AI large models contributed to 20% of the total transactions.
From this perspective, Baidu's venture into e-commerce, while facing significant challenges ahead, is also full of opportunities. In summary, AI has become the most crucial gateway at the top of the internet ecosystem—a strategic stronghold that all tech giants are fully committing to and must embrace. Baidu, with its inherent AI DNA, undoubtedly holds an advantage and is currently on the eve of explosive performance growth.
Therefore, it's worth being more patient with Baidu.