The fire of ChatGPT ignited investors’ enthusiasm for the AI track.

Since Baidu announced that its generative AI product “ERNIE Bot” (ERNIE Bot) will be launched in March, the company has been in the focus of market attention.

On February 22, Baidu released its financial report for the fourth quarter and full year of 2022. The financial report shows that in 2022, Baidu will achieve revenue of 123.68 billion yuan, and the net profit attributable to Baidu will be 20.68 billion yuan, a year-on-year increase of 10%.

Among them, in the fourth quarter, Baidu’s revenue was 33.08 billion yuan, 33.1 billion yuan in the same period last year; net profit was 4.953 billion yuan, 1.715 billion yuan in the same period last year. Previously, the market expected Baidu’s revenue for the quarter to be 32.012 billion yuan and net profit to be 2.861 billion yuan.

Revenue was roughly flat year-on-year but better than market expectations, coupled with a sharp increase in net profit, Baidu announced a $5 billion share repurchase plan.

In 2022, which is full of challenges, Baidu’s overall performance is making steady progress, and new development forces are bursting out of the entire business portfolio. With the gradual recovery of the domestic economy, Baidu’s long-term investment in the field of AI may usher in a harvest time.

The mobile ecosystem moves forward under pressure, and the “new engine” accelerates

“Cost reduction and efficiency increase” is the key word in 2022.

The traffic dividend has been exhausted, and the epidemic has impacted the macro economy. In the past year, the domestic Internet industry has been filled with chills. According to data from the Ministry of Industry and Information Technology, in 2022, the total revenue of Internet and related service companies above designated size in China will reach 1.46 trillion yuan, a year-on-year decrease of 1.1%. This is the first year-on-year decline in the past ten years. At the same time, although the total profit of China’s Internet industry is still growing, the growth rate has slowed down.

It was in such an environment that Baidu handed over a report card with stable revenue and higher profits than expected.

From the perspective of specific businesses, the basic market is under pressure but resilient, and innovative businesses have made remarkable progress.

First of all, Baidu Group’s basic market-the mobile ecosystem is still under pressure, but key indicators are performing well.

At present, the mobile ecosystem still contributes most of the revenue. In 2022, Baidu’s core revenue will be 95.4 billion yuan. Among them, online advertising marketing revenue was 69.5 billion yuan, a year-on-year decrease of 6%.

As the epidemic has repeatedly affected offline economic activities and advertisers have cut their budgets, it is expected that Baidu’s revenue from advertising will decrease. According to the “2022 China Internet Advertising Data Report”, in 2022, the scale of China’s Internet advertising market is expected to be about 508.8 billion yuan, a decrease of 6.38% from 2021

However, due to the important role of the Wenxin large model family in improving search results, such as optimizing search rankings and enhancing multi-modal search capabilities, Baidu continues to expand its competitive advantage in the search field.

In 2022, Baidu’s share in the search market will still be far ahead, and the APP monthly active user indicator will maintain a positive growth. According to statcounter statistics, Baidu still ranked first in China’s mobile search market with an ultra-high share of more than 85% last year. By the end of the year, the monthly active users of Baidu APP reached 648 million, a year-on-year increase of 4%.

Interpretation of Baidu’s financial report: Revenue remains flat and net profit increases, “Wen Xin Yi Yan” stands at C


Source: statcounter statistics

Strong mobile ecological traffic means that Baidu will become the main beneficiary of the advertising field in the process of economic recovery. As advertisers expect better market prospects and economic activities increase, Baidu’s online advertising marketing revenue is expected to resume growth.

Secondly, innovative businesses such as ACG and IDG have maintained growth and become a new engine for Baidu’s performance growth.

In 2022, among Baidu’s core business revenue, revenue from non-online advertising marketing (cloud computing and other artificial intelligence-driven businesses) will be 25.9 billion yuan, a year-on-year increase of 22%.

On the one hand, as the carrier of Baidu’s AI to B business, Baidu Smart Cloud provides standardized AI solutions that go deep into core scenarios through an understanding of industry-specific pain points, achieving a leading market share. The IDC report shows that in the first half of 2022, Baidu Smart Cloud will rank first in the AI public cloud service market, which is also the first market share of Baidu Smart Cloud for four consecutive years.

On the other hand, Baidu’s autonomous driving business is steadily advancing, and Apollo, the core of IDG (Intelligent Driving Business Group), has expanded from the field of autonomous driving to the entire intelligent transportation system.

From the perspective of autonomous driving business, as of the end of January 2023, Carrot Kuaipao has accumulated more than 2 million orders, ranking firmly as the world’s largest autonomous driving travel service provider.

From a technical point of view, Baidu is still the leader in this field. Recently, Apollo released a new BEV autonomous driving perception solution and UniBEV solution. The former uses advanced sensors to improve the detection capabilities of intelligent vehicles, and the latter integrates multiple sensors, models and tasks to provide an end-to-end autonomous driving solution. . In addition, Baidu also released the smart road OS, which has five functions: AI middle platform, navigation service, communication, open source application service capability, and hardware connection.

In the end, iQiyi no longer dragged down the overall performance, and Baidu’s continuous cost reduction, efficiency increase, and streamlined operations have also begun to reap results.

In the fourth quarter, iQiyi also contributed nearly 200 million in free cash flow. As of the end of the fourth quarter, Baidu’s free cash flow was 5.9 billion yuan, excluding iQiyi’s free cash flow was 5.1 billion yuan.

At the same time, due to cost reduction, efficiency enhancement, and streamlined operations, Baidu’s personnel-related expenses have been reduced, and research and development expenses have decreased by 7% year-on-year. From the second half of the year, core operating profit (non-GAAP) has increased by 14% year-on-year.

In general, Baidu’s operating status is healthier, and the three growth curves have all returned to the trajectory of positive growth. The internal testing and opening of “Wen Xin Yi Yan” will become the biggest attraction in 2023.

In the wave of artificial intelligence, “Wen Xin Yi Yan” outlines Baidu’s new blueprint?

Just as Meta chose All in Metaverse, Baidu has been at the forefront of the development of artificial intelligence technology since its strategic focus on artificial intelligence in 2016.

From Wenxin Yige to Wenxin Yiyan, Baidu has been researching large-scale language models for a long time. When Baidu was listed for the second time in April 2021, Robin Li, chairman and CEO of Baidu, once said: “In the future, natural language understanding will become the protagonist. When machines can truly understand what people are saying, a large number of applications will emerge as the times require. And it will be more popular than current apps.”

Now, Baidu is lowering the technical barriers to the adoption of artificial intelligence through its own artificial intelligence technology framework, empowering its own business and unlocking the “new world” of business.

First, “Wen Xin Yi Yan” will become a subversive force driving the development of Baidu’s search business.

In the financial report letter sent to all Baidu employees, Li Yanhong stated that Baidu will launch a generative AI product Wenxin Yiyan in March, and announced plans to integrate a number of mainstream businesses with Wenxin Yiyan. “Wen Xin Yi Yan will first be embedded in the Baidu search engine.” Robin Li added.

First applied to Baidu search, Wenxin Yiyan will reshape the way information is generated and presented, and create the next generation of Internet traffic portals. This means that the number of Baidu mobile ecosystem users and market size are expected to continue to grow, and user stickiness will increase.

Earlier, one day after Microsoft announced that its new Edge browser and Bing search engine would integrate ChatGPT, from data. Global downloads of the Bing app jumped 10-fold overnight, boosting it to the tenth spot on Apple’s App Store’s list of the most popular free apps, according to ai’s analysis.

In this regard, Robin Li pointed out that compared with models developed overseas, Wenxinyiyan is more suitable for the Chinese market.

On the one hand, generative AI products carry the goal of search engines from “fuzzy search” to “precise push”. Under the learning technology and algorithm, there are differences in performance when dealing with Chinese and English.

Perhaps as Li Yanhong said: “When it comes to Chinese ability, Wenxin Yiyan is the most advanced.”

On the other hand, in the domestic market, Baidu’s search market share is far ahead of other competing products. Compared with “OpenAI+Bing”, Baidu’s mobile ecosystem combined with AI is more like “OpenAI+Google”, and Wenxin’s words can further consolidate its advantages in the search field.

Secondly, Baidu’s artificial intelligence ecosystem built around Wenxin Yiyan can also radiate to more fields.

After Baidu’s official announcement of internal testing, the first batch of ecosystem companies covered media, radio and television, integrated media, advertising marketing, film and television, reading, finance, smart cars and other fields.

In the future, Baidu will not only be able to access its own Apollo autonomous driving platform, Baidu Smart Cloud, iQiyi, Xiaodu and other ecological products, but also integrate with the cloud to allow more companies to access AI technology and help customers improve operational efficiency.

In 2022, Baidu AI cloud business has introduced the integration of cloud and AI 3.0 framework and the internally developed AI infrastructure AI Stack. Baidu AI Stack represents Baidu Cloud’s AI IaaS, which integrates its Kunlun chip to optimize the performance of AI computing, storage and acceleration.

It is worth mentioning that at the AI PaaS layer, combined with the PaddlePaddle deep learning framework and the Wenxin model, Baidu provides a full-chain solution for enterprise model development to help enterprises lower the threshold for adopting artificial intelligence.

As Baidu CEO Robin Li said, Baidu’s goal is to make the company’s most advanced large-scale language models available to both consumers and businesses.

Wenxinyiyan provides external services through Baidu Smart Cloud, carrying Baidu’s “cloud computing as the basis” to support the digital transformation of enterprises, using “artificial intelligence as the engine” to accelerate the intelligent upgrading of industries, and “integration of cloud and intelligence” to empower thousands of industries long-term goals.

And Baidu has indeed caught up with the best times. Just as Li Yanhong said: “China’s AI market is about to usher in explosive demand growth, and its commercial value release will be unprecedented and exponential. As the best representative of the long-term growth of China’s artificial intelligence market, Baidu is standing on the wave top.”


A better-than-expected report card has obviously encouraged Baidu’s investors. With revenue remaining stable, the increase in net profit proves that Baidu has achieved remarkable results in reducing costs and increasing efficiency in the past year. Most importantly, Baidu’s progress in “Wen Xin Yi Yan” shows its growth potential.

The price fluctuates around the value. After the financial report was released, many major banks raised Baidu’s target stock price. Among them, Jefferies maintains Baidu Group’s “buy” rating, and raises the target price from HK$204 to HK$207; Bank of America Securities reiterates its buy rating and target price of HK$230; Jefferies Group raises Baidu’s target price from US$210 to $214.

Jefferies, Bank of America, and Goldman Sachs all pointed out that Baidu’s business in the first half of this year is expected to continue to improve, and core online marketing revenue is expected to achieve year-on-year growth in the first quarter. Goldman also said it expects cloud revenue to re-accelerate in the second quarter of this year.

The recovery of core business is expected to be beneficial to Baidu’s secondary market performance, but for popular technologies such as “Wen Xin Yi Yan”, investors still need to analyze rationally and realize what is a real product.

There is no doubt that the emergence of ChatGPT has become an important milestone in artificial intelligence.

However, if you are fascinated by the moon in the sky, you must also see the sixpence under your feet. Whether it is “Wen Xin Yi Yan” or ChatGPT, they still have to go through a long-term road of capital investment and technology accumulation.

Interpretation of Baidu’s financial report

As Alphabet chairman Jeff Dean said, chatbots are vulnerable to bias and false information, and a large company with a large number of users is even less likely to get rid of this influence. Enterprises certainly hope to use these technologies in real products, especially with better language models. “But it’s more important that we do the right thing.”

At the same time, the essence of search advertising is to show users more results pages, while generative AI products push answers more accurately and logically. The combination of the two may affect search advertising revenue. The income from search and information flow business is still Baidu’s most stable ballast stone.

How to balance technology and business is also an important proposition for Baidu in the next stage. What investors want is “hurricane”, but what Baidu has to do is “land”.