The summer can be a volatile period for the stock market. Many professionals take time off, and the lack of volume can lead to much wider swings both up and down when news hits. That has been the case throughout much of August, as stocks fell in the first part of the month but have seen some signs of strength so far this week. Markets moved higher early Tuesday morning, with the tech-heavy Nasdaq Composite leading the way higher.
One stock that helped give the Nasdaq a boost was Baidu (BIDU 0.62%), which released its quarterly financial report and gave an update on its artificial intelligence efforts. Yet another stock, Fabrinet (FN 1.89%), enjoyed much larger share price gains than Baidu. Here are the details you need to know about both tech stocks.
Baidu highlights AI aspirations
Shares of Baidu were up 4% early Tuesday morning. The Chinese internet search giant reported second-quarter financial results that gave the company a chance to highlight what it's doing on the AI front.
Baidu's financial results were solid. Revenue climbed 15% year over year to $4.7 billion. Adjusted net income grew at a 44% rate to $1.1 billion, working out to $3.11 per share.
But investors focused more squarely on Baidu's recent business achievements, which include a number of artificial intelligence initiatives. The company's launch of the Ernie 3.5 version of its conversational AI bot has gone well, with reviewers saying that the service does well in providing a robust algorithm that works for users in a wide variety of industries and provides solid tools for developers. Baidu now has 8 million developers using its PaddlePaddle open-source deep learning framework, and the company received the top ranking among AI cloud providers in China for the fourth straight year.
Meanwhile, Baidu is also making progress on autonomous ride-hailing, with the Apollo Go service giving 714,000 rides in the second quarter, up nearly 150% from 12 months earlier. With new permits to serve the Shenzhen Pingshan area, Baidu will be ramping up service to complement what it's doing in Beijing, Wuhan, and Chongqing. With everything going on in AI right now, investors like what Baidu is getting accomplished.
Fabrinet is getting it done
Shares of Fabrinet soared 31% just after the open Tuesday morning. The optical packaging and manufacturing services provider reported fiscal fourth-quarter financial results for the period ended June 30 that showed its ability to use AI demand to its advantage.
Fabrinet managed to post modest levels of growth for the quarter. Revenue of $656 million was up 12% from year-earlier levels. Adjusted net income of $68.4 million inched higher by 9% year over year, producing adjusted earnings of $1.86 per share.
Investors were pleased to see Fabrinet point to its datacom segment as a potential driver of accelerating growth in the future. As CEO Seamus Grady noted, new AI products more than offset some of the challenges that Fabrinet faced as its customers adjusted their inventory levels. Grady also believes that AI will keep supporting his company's growth in fiscal 2024.
Indeed, shareholders liked the guidance that Fabrinet provided for the current fiscal first quarter. The company sees revenue staying consistent in a range of $650 million to $670 million, and adjusted earnings of $1.83 to $1.90 per share would also be in line with how the fourth quarter went. That doesn't imply a huge jump higher for Fabrinet in the short run, but it does show the company's ability to weather difficult conditions and still find ways to stay strong.
