Baidu’s quarterly revenue drops 4% as AI cloud surge fails to offset advertising slump

Chinese tech giant Baidu on Tuesday posted a 4 per cent year-on-year decline in second-quarter revenue, as continued weakness in advertising outweighed growth in its Artificial Intelligence cloud operations, highlighting intensifying competition in China’s tech sector.Revenue for the three months ended June reached 31.3 billion yuan (US$4.62 billion), slightly missing the 31.6 billion yuan consensus estimate from analysts polled by Bloomberg. Net profit for the quarter was 2.3 billion yuan.Online marketing revenue, Baidu’s traditional mainstay, declined 19 per cent to 13.1 billion yuan compared to a year earlier as advertisers remained cautious amid a sluggish macroeconomic environment.Helping cushion the fall, revenue from AI-related operations – spanning cloud, applications and marketing services – jumped 25 per cent year on year to 12.5 billion yuan.The push underscores Baidu’s rapid revenue shift: in the first quarter, AI-powered operations accounted for more than half of its general business revenue for the first time.AI cloud revenue grew 50 per cent year on year to 7.3 billion yuan during the second quarter. AI applications rose 3 per cent to 2.5 billion yuan, while AI marketing services were flat at 2.6 billion yuan.“While our online marketing business remains under pressure, the growing momentum in our core AI-powered business reaffirms Baidu’s transition from an internet-centric company to an AI-first company,” Baidu founder and CEO Robin Li Yanhong said in the earnings statement.