Financial performance: the core non-advertising business is growing rapidly, and profits continue to be under pressure. 2022Q1, the company achieved operating income of 28.4 billion yuan, an increase of 1% over the same period last year. Core business and iQIYI, Inc. increased by 4.37% and-8.68% respectively compared with the same period last year. Advertising revenue in the core business grew by-3.68 per cent, while non-advertising revenue, including AI cloud and hardware, grew by 35 per cent. The company's quarterly net profit in GAAP was-751 million yuan, an increase of-103% over the same period last year.
Core advertising: there are still challenges in the macro environment, with negative revenue growth. 2022Q1's core advertising revenue was 15.7 billion yuan, an increase of-3.68% over the same period last year. Under the influence of the epidemic and economic factors, the growth rate continued to slow, and advertising demand in education, real estate, tourism and other industries was sluggish. Considering the continued weak demand from advertisers and the impact of multi-city controls caused by the epidemic on the economy, the growth of 2022Q2 Baidu, Inc. 's core advertising revenue is still under pressure.
Artificial intelligence: the AI cloud still maintains high growth under the disturbance of the epidemic. The revenue of 2022Q1 cloud computing business is 3.9 billion yuan, up 45% from the same period last year, down from 60% in the previous quarter, indicating that the epidemic has a negative impact on the expansion of customers, but the cloud business can still maintain rapid growth. Baidu, Inc. AI Cloud continues the good performance of the previous quarter in transportation, energy, public services and other industries.
Intelligent driving: self-driving online car-hailing and smart driving products have a good momentum. Baidu, Inc. 's Apollo self-driving ride-hailing service provided 196, 000 services this quarter. Wuhan and Jiaxing Wuzhen were added to the landing cities, increasing the total coverage of cities to 10, an increase of 2 over the previous quarter. Baidu, Inc. 's smart driving products ANP and AVP have expanded their new customers Dongfeng Motor this quarter. Jidu plans to accept orders in the second half of 2022 and enter mass production in the second half of 2023, with a second car to be released by the end of 2022.
Risk hint: innovative advertising business is affected by the economy; AI cloud business rapid expansion and joint venture car construction all require upfront expenditure; intelligent driving business may land slower than expected; and core technical talent is at risk.
Investment advice: be bullish on AI and smart driving business, consider macro risks, and maintain an "overweight" rating. This quarter, the smart driving business is making smooth progress in the commercialization of self-driving ride-hailing and ANP and AVP products, and the AI cloud business is still growing at a high speed affected by the epidemic. Baidu, Inc. App has now built an ecological closed loop, and the process of upgrading the growth center of advertising revenue in App is interfered by macroeconomic and epidemic factors. The sluggish advertising revenue in 2022 may continue, and the Internet advertising industry is still in the downward stage. Therefore, we have lowered Baidu, Inc. 's long-term growth forecast for online marketing from 9% to 8%, and reduced the growth forecast for AI Cloud to 45% in 2022. In order to reflect the negative impact of the epidemic on the expansion of customers. The valuation range is HK $185-195, which is downgraded by 15% to 15%, respectively, and the "overweight" rating is maintained.