Baidu reported quarterly revenue below analysts’ expectations as weaker advertising demand outweighed expansion in its AI cloud business.
Advertising, still a core source of income, declined amid cautious spending by Chinese businesses and a challenging economic environment.
The company’s AI cloud operations continued to grow, reflecting rising demand for computing power and services supporting generative artificial intelligence.
Baidu is investing heavily in Ernie, its large language model, and related AI products as it seeks to reduce reliance on traditional search advertising.
Investors will be watching whether AI can scale quickly enough to offset weakness in the company’s established businesses, while also tracking the costs of developing and deploying advanced models.
The results underscore the difficult transition facing major technology companies: AI offers substantial long-term potential, but monetization remains uneven as advertising markets soften and competition intensifies.