Wei Zhong

Wei Zhong inquired about the rationale behind this quarter's asset impairment, CapEx plans for next year, the margin trajectory as AI revenues grow, and an update on shareholder returns after the current buyback program expires.

Answer

CFO Henry Haijian He explained the asset impairment resulted from a proactive review of infrastructure, where some assets no longer met current AI computing efficiency requirements, leading to a healthier, optimized portfolio. He stated Baidu maintains high AI investment (over RMB 100 billion since March 2023) and expects greater operational leverage. He noted Q3 as a margin low point, with efforts to improve non-GAAP operational income and margins next year through a leaner asset base, disciplined investment, and enhanced AI infrastructure utilization. He also confirmed $2.3 billion in share buybacks under the 2023 program and ongoing review of future buyback mechanisms and diversified return policies.

Wei Zhong asked for the rationale behind Q3's asset impairment, next year's CapEx plans, the margin trajectory as AI revenues grow, and an update on shareholder returns post-current buyback program.

Answer

CFO Henry Haijian He explained the Q3 asset impairment resulted from a comprehensive review of infrastructure, proactively impairing assets that no longer met current AI computing efficiency requirements, leading to a healthier asset portfolio. He stated Baidu maintains high CapEx, having invested over CNY 100 billion in AI since March 2023, and will continue increasing investment intensity. He expects Q3 to be a lower point for margins, striving for non-GAAP operational income and margin improvement next year through a leaner asset base, disciplined investment, and enhanced AI infrastructure utilization. He also confirmed $2.3 billion in shares bought back under the 2023 program, with future buyback mechanisms and diversified return policies (e.g., dividends) under review for consistent shareholder value.