(Yicai Global) May 17 -- Baidu's stock price advanced after the Chinese tech giant said it turned profitable again in the first quarter as economic recovery pushed up companies' advertising demand.

Baidu [NASDAQ: BIDU] was 0.5 percent down in after-hours trading as of 1 p.m. after closing at USD132.68, up 4 percent. This year, the shares have surged by more than 11 percent.

Cavenagh Research predicts Baidu's stock price will rebound to USD150 or even USD160 as digital advertising demand is expected to further pick up in the second quarter.

From January to March, the search engine and autonomous driving company's net income tallied CNY5.8 billion (USD848 million), compared with a net loss of CNY885 million a year earlier, the Beijing-based firm announced in its earnings report released yesterday.

Revenue climbed 10 percent to CNY31.1 billion (USD4.5 billion) as income from core businesses rose by 8 percent to CNY23 billion. Among the key segments, online marketing revenue increased by 6 percent to CNY16.6 billion and that of offline advertising jumped by 11 percent to CNY6.4 billion (USD914.8 million).

One of the highlights was Netflix-like video platform iQiyi which earned 15 percent more at CNY8.3 billion. Baidu's cloud service provider AI Cloud boosted its revenue by 8 percent to CNY4.2 billion.

The autopilot developer is also exploring ChatGPT-like large language models. Baidu plans to steadily incorporate its self-developed Ernie Bot into all of its businesses, according to Robin Li, co-founder and chief executive. "This will empower our products and offerings, drawing in a larger user and customer base, while allowing us to establish a new ecosystem around the Ernie Bot for the new era. It will also enable us to drive long-term, sustainable growth." The firm unveiled the chatbot in mid-March for public testing, prompting a stock price slump.

Baidu will capitalize on the long-term market opportunity of large language models and is committed to investing and creating value through Ernie Bot, Shen Dou, executive president of the AI cloud group, said during the earnings call.

China's cyberspace regulator is paying more attention to AI content generation by releasing a draft of new rules last month but Baidu seeks to comply as it has applied for licensing. The regulator’s active engagement in the early stages of AICG will raise entry barriers and Baidu is well-positioned for that, Li said. 

The number of monthly active users of Baidu's mobile application tallied 657 million as of March 31, up 4 percent. Some of the firm's other recent highlights involve smart businesses. Baidu’s robotaxi service Apollo Go completed around 660,000 rides in the first quarter, more than three times that of a year ago. Another one is about smaller hardware as last year, sales of Baidu's smart speaker Xiaodu ranked No. 1 in China, according to IDC and Canalys.

Editor: Emmi Laine, Xiao Yi