4 months ago • 2 mins
What’s going on here?
Chinese internet giant Baidu reported some pretty impressive results on Tuesday.
What does this mean?
As the biggest search engine in the country, Baidu is essentially China’s answer to Google. And even as the broader economy’s taking its sweet time to get moving, online advertising is bouncing back – just take a look at Tencent’s recent numbers for proof of that. That’s great news for Baidu, given that a hefty portion of its revenue comes from digital marketing. In fact, the firm saw 15% growth in that segment last quarter, as businesses eagerly ramped up their ad campaigns during the post-lockdown reopening phase. That helped Baidu’s revenue grow at the fastest pace in two years. And that got investors – already impressed by the firm’s new AI offerings last week – sending shares up too.
Why should I care?
The bigger picture: Chipping away.
Of course, Baidu isn’t the only player with AI dreams, with the likes of Alibaba and Tencent trying to make inroads too. But whichever Chinese giant comes out on top, they all need one thing to make it happen: chips. And given the looming concerns that the US might tighten export controls, these giants aren’t taking any chances. In fact, recent reports showed a scramble among Baidu, ByteDance, Tencent, and Alibaba to secure high-performance chips from Nvidia. Collectively, they’ve already placed orders worth a whopping $5 billion, set for delivery in the coming years.
Zooming out: Twisting investors’ Arm.
Many are bullish on Arm riding the AI wave too, but the chip designer – fresh from filing for its stock market listing this week – isn’t without its share of investor skepticism. See, Arm just disclosed that a quarter of its revenue comes from China, warning that it’s particularly vulnerable to escalating tensions between China and the West. That kind of complication might just dampen the enthusiasm for the firm’s much-anticipated listing, which had been touted as the biggest blockbuster of 2023.
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