Baidu has emphasized its leadership in artificial intelligence (AI) as a strategic advantage in navigating an increasingly competitive market, despite a slight decline in quarterly revenue. This statement comes during an AI price war in China, where companies have significantly reduced the prices of large language models used for generative AI products. Baidu CEO Robin Li noted during a recent earnings call that competition in the AI sector is expected to be intense over the next two to three years.
Li highlighted Baidu’s Ernie platform, claiming it handles over 600 million AI requests daily, the highest number among Chinese companies. Baidu, primarily known as China’s dominant search engine, has been shifting its focus towards becoming an AI-centric company. However, for the quarter ending in June, Baidu’s revenue dropped 0.4% to 33.93 billion yuan ($4.67 billion), slightly exceeding analysts’ expectations of 33.55 billion yuan, according to LSEG data.
The company’s online marketing business, which constitutes the bulk of its revenue, fell by 2% to 19.2 billion yuan. This decline is attributed to a slowing Chinese economy, still recovering from a property market slump, leading advertisers to cut back on their budgets. Baidu’s Ernie platform, promoted as a competitor to OpenAI’s GPT, is integrated into various app services to enhance user experience. The company has introduced a paid version of its Ernie-powered chatbot for public use and offers API services to developers through its cloud computing division.
Li mentioned that generative AI accounted for 9% of Baidu’s cloud computing revenue, which totaled 5.1 billion yuan in Q2, an increase from 6.9% in the previous quarter. Baidu is also investing in autonomous vehicles as part of its AI strategy. Its Apollo Go robotaxis are operational in multiple Chinese cities, including a fleet of 500 vehicles in Wuhan. Although this business segment hasn’t significantly contributed to overall revenue, Baidu expects its Wuhan operations to break even by the end of the year.
The company’s adjusted net income decreased by 8% to 7.4 billion yuan but surpassed analyst projections of 6.45 billion yuan.
Featured Image courtesy of Mobile World Live
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