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The stock market is usually an efficient discounting vehicle of future cash flows. Nonetheless, it does succumb to the occasional episodes of irrationality. Look no further than a contrast between Baidu and Tesla, where the former currently trades at a price-to-sales (P/S) ratio of 1.68x with essentially flat year-over-year growth, and the latter trades at a P/S ratio of 8.17x with manifestly negative annual growth. This disparity is in focus today as Baidu makes critical headway, particularly in the robotaxi sphere.
Baidu's Q2 2024 Earnings
Baidu has now announced its earnings for the second quarter of 2024, registering total revenue of $4.67 billion for the three-month period, which corresponds to 8 percent sequential but 0 percent year-over-year growth.
Critically, Baidu's total sales for the quarter missed analysts' consensus expectations of $4.74 billion. While the company continues to face "macro headwinds" in the online marketing sphere, it is trying to offset this weakness by registering healthy growth in the AI cloud space.
$BIDU CEO: Currently 18% of Baidu search results are AI-generated v 11% in May; Q2 Gen AI contribution to Cloud Computing unit Rev at 9% v 6.9% q/q - conf call comments (Baidu Inc)
(More at https://t.co/R9xXIpPLQe)— TradeTheNews.com (@Trade_The_News) August 22, 2024
The company continues to bank on its AI-based search engine strategy to deliver long-term growth. It also recently expanded its portfolio of large language models (LLMs), dubbed Ernie, by launching the Ernie 4.0 Turbo LLM in June 2024.
Meanwhile, the Baidu super app's monthly active users (MAUs) increased 4 percent in Q2 2024 to reach the 703 million mark.
Of course, the company's margins in the AI cloud sphere are being dented by a fairly robust price war with Alibaba, Tencent, ByteDance, and iFlytek, resulting in broad-based cuts to the prices of their respective LLMs.
Do note that Baidu's earnings per American Depository Shares (ADS) fell 7 percent on an annual basis to $2.89, beating estimates of $2.60.
Apollo Go Robotaxi Service
Of course, the Apollo Go robotaxi service is one arena where Baidu is absolutely smashing expectations. To wit, the service clocked in 899,000 rides in the second quarter of 2024, registering year-over-year growth of 26 percent. As of the end of July, the service's cumulative rides had already surpassed the 7 million mark.
Critically, Baidu went "100%" driverless in Wuhan in June 2024, which serves as a significant milestone in the company's quest to expand its Driverless experience to the rest of China.
Moreover, the company continues to test the sixth generation of its bespoke robotaxi, dubbed the RT6, which is expected to cost just $28,350. Unlike Tesla's current lineup, the RT6 is a Level 4 autonomous vehicle that leverages its 5 LiDAR units and a host of other sensors to navigate roads and traffic. The vehicle is expected to be deployed in Wuhan by the end of 2024.
Meanwhile, Tesla is slated to host its own robotaxi event in October. Even so, analysts currently agree that the Tesla robotaxi is largely a "2030 story," given the significant challenges that the EV giant faces in solving the autonomous driving conundrum via its vision-only approach. On the upside, millions of Tesla vehicles already on the road can theoretically transform into robotaxis overnight once Tesla does solve this conundrum for good.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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