Baidu stock price plunged sharply after missing revenue estimates for the second quarter. The leading search engine, knowledge and information centered Internet platform and AI Company reported a small year over year decline in revenue for the second quarter.

Its revenue of $3.69 billion plunged 1% year over year, but revenue jumped 15% from the previous quarter. The company’s strategy of investing in A1 businesses is working.

Despite a challenging macro environment, its in-app revenue and AI businesses saw double-digit growth in the second quarter. The company has also been exploring new revenue streams to improve the future fundamentals.

“Baidu is also diversifying our revenue streams through membership, online games and others to increase the ARPU of our existing traffic.” said Herman Yu, CFO of Baidu.

“The healthy growth of Baidu App and new AI businesses have enabled Baidu Core’s adjusted EBITDA margin to reach 41% in the second quarter. We plan to continue heavy investments in technology to maximize Baidu’s future growth potential,” he added.

On the positive side, its diluted earnings per share soared sharply from the past year period. The company has generated net income growth of 48% from the year ago period.

BIDU Baidu, Inc. daily Stock Chart

Baidu stock price rebounded sharply following the coronavirus selloff early this year. Although the shares are still trading in a negative territory year to date, the stock price is up from 52-weeks low of $82 a share that it had hit in mid-March. Its shares are currently trading around $124, down from 52-weeks high of $147 a share.

The share price performance is likely to remain under pressure in the short-term. The company expects third quarter revenue in the range of $3.7B-4.1B. This represents a growth of -6% to 2%. It forecasts core revenue growth around -7% and 3% from the past year period. Baidu says that COVID-19 situation is evolving in China, and business visibility is very limited.