Baidu Revenue Falls 4% as AI Business Grows 25%

Baidu reported a 4% decline in quarterly revenue for the three months ended June, totaling 31.3 billion yuan (US$4.62 billion). The result missed Bloomberg analyst estimates of 31.6 billion yuan and marked the company's fifth consecutive quarterly drop. Net profit for the period was 2.3 billion yuan, while earnings per share of 7.22 yuan fell short of the projected 9.84 yuan.

Online marketing revenue fell 19% to 13.1 billion yuan, a decline attributed to a stagnant macroeconomic environment, weak consumer spending, and China's property downturn. These losses outweighed gains in other sectors, though operating income only fell slightly to 3 billion yuan from 3.3 billion yuan the previous year.

Conversely, AI-related operations grew 25% year-on-year to 12.5 billion yuan. AI cloud revenue rose 50% to 7.3 billion yuan, and GPU cloud revenue surged 283%. AI applications increased 3% to 2.5 billion yuan. CEO Robin Li stated that this momentum confirms the company's transition from an internet-centric company to an AI-first company.

Despite the AI growth, the company faces high investment costs for its Apollo autonomous driving platform and ERNIE large language model. Baidu also continues to face intense competition from rivals Alibaba and ByteDance.