Baidu (NASDAQ: BIDU) reported stronger-than-expected fourth-quarter earnings. The Chinese internet giant recorded non-GAAP earnings of $3.08 per American Depositary Share (ADS) to top the market analysts’ expectations of $2.59 per share.

The company saw its revenue soar 5% to $4.64 billion, again higher than the Street consensus of $4.44 billion. As for the ongoing quarter, Baidu forecasts revenues between $4 billion and $4.4 billion.

The internet giant said it witnessed strong demand for its artificial intelligence (AI) products. Still, shares of the company are down over 2% in pre-open Thursday.

"Baidu ended 2020 on a solid note with our business benefiting from improving macroeconomic environment and the digitalization of industrial Internet. Our focus on innovation through technology is paying off with Baidu Core non-marketing revenue growing 52% year over year in the fourth quarter," said Robin Li, Co-founder and CEO of Baidu.

"As we enter 2021, Baidu is well positioned as a leading AI company with strong Internet foundation to seize the huge market opportunities in cloud services, autonomous driving, smart transportation, and other AI opportunities. We also hope to capitalize on our huge Internet reach with more non-marketing services."

In other news, the current CEO Li also signaled that the company made its decision on the new chief executive officer. Furthermore, it also decided on a brand for its electric vehicle (EV) venture with Zhejiang Geely Holding Group.

James Lee, a managing director at Mizuho Securities, noted that the company “continued to make a remarkable recovery.”

“Baidu also demonstrated significant operating leverage with a solid margin beat, and we expect that trend to carry into FY21. Finally, management articulated their confidence and strong position in smart transportation and autonomous driving opportunities as the Chinese government recently initiated a multi-year buildout plan,” he said in a note.

Lee maintained BIDU as a top pick and raised the price target to $350.00 per share from the old $325.00.

“Our target valuation for Baidu AD business is based on 3.5x of our estimated long-term revenues of about $12bn. This assumes that Baidu gets a 50% market share and a 33% revenue share from OEMs. The target multiple is consistent with other growing tech segments such as local delivery and software. We also compared with Waymo’s valuation of $30bn. We view our valuation assumptions reasonable given China’s population and the potentially larger auto industry,” he added.