Baidu’s revenue dips ahead of intensifying Chinese AI contest

Baidu’s revenue fell, hurt by an economic downturn that is capping its ability to fight bigger rivals in AI and make inroads in new growth areas.

The Ernie chatbot creator’s sales in the June quarter came to 32.7 billion yuan (US$4.6 billion), in line with the average of analyst estimates for a 4 per cent decline to 32.74 billion yuan. Net income came to 7.3 billion yuan, versus the projected 3.7 billion yuan.

China’s internet search leader is betting big on generative AI to drive future growth, but it faces mounting pressure from rising open-sourced models like DeepSeek as well as a wave of AI-native apps eating into its turf.

That is while its core search business is losing ground to social-video platforms like Xiaohongshu, known as RedNote, and TikTok’s Chinese twin Douyin, while its advertising revenue remains vulnerable to the ups and downs in China’s economy.

Baidu is counting on Ernie to underpin a cloud-to-app AI ecosystem and drive demand for its cloud division, which has expanded sales by double digits in recent quarters. It is also planning to accelerate its Apollo Go robotaxi service’s overseas expansion in its hunt for new revenue.

“We remain focused on AI initiatives,” co-founder Robin Li said in a statement.