Baidu Achieves AI-Driven Earnings Beat
6 Min. Read Time
Baidu Q1 Earnings Overview
Search engine, cloud services, and robotaxi conglomerate Baidu reported Q1 financial results after the close in Hong Kong overnight that beat analysts' low expectations, though results declined year over year (YoY). Revenue from AI Cloud Infrastructure was RMB 8.8 billion in the first quarter of 2026, which was up 79% YoY. AI-related revenues now account for 52% of total revenues, while traditional search and advertising revenues continue to decline. I suspect we’ll find out the timing of their chip spinoff soon, which would force a revaluation of the company.
- Revenue decreased to RMB 32.8 billion ($4.6 billion) from RMB 32.45 billion versus expectations of RMB 31.4 billion.
- Adjusted Net Income declined to RMB 4.3 billion from RMB 6.5 billion versus expectations of RMB 4.1 billion
- Adjusted earnings per share (EPS) declined to RMB 12.1 ($1.8) from RMB 18.5 versus expectations of RMB 11.8.
- Baidu repurchased $172 million worth of its shares in Q1 2026
Key News
Asian equities were largely lower amid ongoing Middle East tensions, which led to a stronger US dollar, with small gains in India and Vietnam. Mainland China and Hong Kong were lower on poor breadth and moderate volume, except for oil & gas, coa, and telecom, as technology hardware and semiconductors were mixed.
Lackluster April economic data contributed to the poor sentiment, as declining housing data weighed on stocks and weak retail sales weighed on E-Commerce, consumer discretionary, and consumer staples.
Tencent fell -1.58% overnight. The stock was Hong Kong’s most heavily traded by value, despite management’s call with a research analyst on their AI efforts. The company resumed its daily buyback program following its Q1 results, as the stock hit a 52-week low.
Alibaba fell -0.54% after stating that its Qwen large language model (LLM) team will make a significant announcement on May 20th. Li Auto fell -14.15% after launching their new L9 Livis model, which, an analyst believes, will struggle. Leapmotor fell -7.83% after Q1 results were mixed, along with Li’s weakness, which weighed on other auto stocks, including BYD, which fell -2.75%, and Geely, which fell -4.81%.
Mainland investors sold $1.01 billion worth of Hong Kong-listed stocks and ETFs today, including the Hong Kong Tracker ETF, which saw a very large net outflow.
ChangXin Memory Technologies, a semiconductor company, updated its STAR Board IPO filing with its latest financial results, which showed revenue up 719% year-over-year (YoY) and net profit up 1,688% to RMB 24.76 billion. ChangXin’s release pushed China’s AI "picks and shovels" trade in technology hardware and chips higher, except for Semiconductor Manufacturing International (SMIC), which fell 3.44% in Hong Kong and 1.18% in Mainland China, though the broader market was quite weak. The ETFs favored by the "National Team", i.e., investment firms associated with China's sovereign wealth, indicating no buying on the pullback.
The White House released its review of President Trump’s China trip, which the Ministry of Foreign Affairs spokesperson confirmed was a positive first step despite widely negative headlines. Big picture, the state of US-China relations has greatly deteriorated as Biden never visited China despite the strong economic ties. This trip, potentially the first of four meetings between the two leaders, starts the path to better relations, which is highly mutually beneficial. The White House noted the following points:
- The Board of Trade will allow the United States Government and the Government of China to manage bilateral trade across non-sensitive goods.
- The Board of Investment will provide a government-to-government forum for discussing investment-related issues.
- China will address US concerns regarding supply chain shortages related to rare earths and other critical minerals.
- China approved an initial purchase of 200 American-made Boeing aircraft
- China will purchase at least $17 billion per year of U.S. agricultural products in 2026 (prorated), 2027, and 2028
- China restored market access for US beef by renewing expired listings of more than 400 U.S. beef facilities and adding new listings.
- China resumed imports of poultry from U.S. states determined by the USDA to be free of highly pathogenic avian influenza.
Click here to view the White House's press release.
April Economic Data Release
- Retail Sales +0.2% versus March’s 1.7% and expectations of 2%
- Retail Sales year-to-date (YTD) 1.9% versus March’s 2.4%. Excluding auto, retail sales +3.1% YoY.
- Industrial Production 4.1% versus March’s 5.7% and expectations of 6%
- Industrial Production YTD YoY 5.6% versus March’s 6.1%
- Fixed Asset Investment -1.6% versus March’s 1.7% and expectations of 1.7%
- New Home Prices month-over-month (MoM) -0.19% versus March’s -0.21%
- Used Home Prices MoM -0.23% versus March’s -0.24%
- Property Investment YTD YoY -13.7% versus March’s -11.2% and expectations of -11.5%
- Residential Property Sales YTD YoY -13.7% versus March’s -11.2%
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.1% |
| Hang Seng Tech | HSTECH Index | -1.9% |
| Hong Kong Turnover | HKTurn Index | -10% |
| Hong Kong Short Sale Turnover | HKSST Index | -24.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 18.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -1005.90510855683 |
| China (Shanghai) | SHCOMP Index | -0.1% |
| China (Shenzhen) | SZCOMP Index | 0% |
| China (STAR Board) | Star50 Index | 0.8% |
| Mainland Turnover | .chturn Index | -13.7% |
| Japan | NKY Index | -1% |
| India | SENSEX Index | 0.1% |
| Indonesia | JCI Index | -1.8% |
| Malaysia | FBMKLCI Index | -0.7% |
| Pakistan | KSE100 Index | -2.6% |
| Philippines | PCOMP Index | -0.6% |
| South Korea | KOSPI Index | 0.3% |
| Taiwan | TWSE Index | -0.7% |
| Thailand | SET Index | 0% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | -1.5% |
| Vietnam | VNINDEX Index | 0.3% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 112 | 135 |
| Advancing Stocks | 84 | 1934 |
| Declining Stocks | 435 | 3086 |
| Outperforming Factors | Liquidity, Momentum | |
| Underperforming Factors | Quality, Value, EPS Revision | Value, Buyback, Dividend Yield |
| Top Sectors | Energy, Information Technology, Utilities | Information Technology, Energy, Communication Services |
| Bottom Sectors | Real Estate, Healthcare, Staples | Real Estate, Healthcare, Materials |
| Top Subsectors | Telecom Services, Coal, Tech Hardware | Telecom, Soft Drink, Power Generation Equipment |
| Bottom Subsectors | Consumer Staples Distribution, Auto, Real Estate Management/Development | Construction Machinery, Office Supplies, Motorcycle |
| Southbound Connect Buys | Tencent (Moderate), SMIC (Small) | N/A |
| Southbound Connect Sells | HK Tracker ETF (Very Large), Alibaba (Large) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | -1.25 |
| Communication Services | 11 | -1.58 |
| Consumer Discretionary | 28 | -1.36 |
| Consumer Staples | 12 | -2.56 |
| Energy | 6 | 1.05 |
| Financials | 25 | -0.59 |
| Health Care | 16 | -2.6 |
| Industrials | 19 | -1.54 |
| Information Technology | 15 | 0.16 |
| Materials | 14 | -2.07 |
| Real Estate | 1 | -4.5 |
| Utilities | 6 | -0.56 |
| Mainland China Listed | 11 | -0.32 |
| Communication Services | 11 | 0.23 |
| Consumer Discretionary | 26 | -0.9 |
| Consumer Staples | 18 | -1.17 |
| Energy | 11 | 0.6 |
| Financials | 64 | -0.76 |
| Health Care | 29 | -2.11 |
| Industrials | 60 | -1.05 |
| Information Technology | 113 | 1.33 |
| Materials | 58 | -1.77 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.6 |
| Alibaba HK | 9988 HK Equity | -0.5 |
| JD.com HK | 9618 HK Equity | -1.1 |
| NetEase HK | 9999 HK Equity | -2.2 |
| Yum China HK | 9987 HK Equity | -1.6 |
| Baozun HK | 9991 HK Equity | -8.5 |
| Baidu HK | 9888 HK Equity | -0.8 |
| Autohome HK | 2518 HK Equity | -4 |
| Bilibili HK | 9626 HK Equity | -1.9 |
| Trip.com HK | 9961 HK Equity | -1.3 |
| EDU HK | 9901 HK Equity | 1.7 |
| Xpeng HK | 9868 HK Equity | -1.1 |
| Weibo HK | 9898 HK Equity | -1.6 |
| Li Auto HK | 2015 HK Equity | -14.2 |
| Nio Auto HK | 9866 HK Equity | -3.5 |
| Zhihu HK | 2390 HK Equity | -2.6 |
| KE HK | 2423 HK Equity | -3.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.3 |
| Meituan HK | 3690 HK Equity | -0.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -1.6 |
| ALIBABA GROUP HOLDING LTD | -0.5 |
| SEMICONDUCTOR MANUFACTURI-H | -3.4 |
| LI AUTO INC-CLASS A | -14.2 |
| XIAOMI CORP-CLASS B | -0.1 |
| YANGTZE OPTICAL FIBRE AND-H | 7.9 |
| RADIANCE HOLDINGS GROUP CO L | 13.3 |
| MEITUAN-CLASS B | -0.7 |
| HUA HONG SEMICONDUCTOR LTD-H | -0.1 |
| CNOOC LTD-H | 1.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| GIGADEVICE SEMICONDUCTO-CL A | 6.6 |
| ZHONGJI INNOLIGHT CO LTD-A | -0.5 |
| SUZHOU TFC OPTICAL COMMUNI-A | -3.8 |
| MONTAGE TECHNOLOGY CO LTD-A | 0 |
| EOPTOLINK TECHNOLOGY INC L-A | -1.7 |
| FOXCONN INDUSTRIAL INTERNE-A | 2 |
| BIWIN STORAGE TECHNOLOGY C-A | 8.1 |
| SUZHOU DONGSHAN PRECISION-A | 3.9 |
| CAMBRICON TECHNOLOGIES-A | 0.7 |
| LUXSHARE PRECISION INDUSTR-A | -1.5 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.80 versus 6.81 Friday
- CNY per EUR 7.92 versus 7.92 Friday
- Yield on 10-Year Government Bond 1.76% versus 1.77% Friday
- Yield on 10-Year China Development Bank Bond 1.83% versus 1.84% Friday
- Copper Price -1.63%
- Steel Price -0.86%
