Baidu reports flat second-quarter revenue as China’s economic slowdown hurts ad spending

(Reuters) — Chinese search engine giant Baidu ( BIDU, 9888.HK ) reported flat quarterly revenue on Thursday as a sluggish economy hit advertiser spending.

Second-quarter revenue was 33.93 billion yuan ($4.67 billion), compared with the average analyst estimate of 33.55 billion, LSEG data showed.

Net income fell 8 percent to 7.4 billion yuan, but beat the 6.45 billion yuan expected by analysts.

Baidu’s publicly traded shares rose more than 1 percent in premarket trading.

Baidu’s online marketing business, which generates most of its revenue, fell 2 percent to 19.2 billion yuan.

The decline reflects a slowdown in China’s economy, which is still recovering from a slump in the housing market, prompting advertisers to tighten their budgets.

In recent years, the company has increased its investment in AI and other advanced technologies as part of its transformation into a self-described “AI company.”

Ernie, Baidu’s large language model platform, touted as a rival to OpenAI’s GPT, has been embedded into various application services to improve user experience.

The company has also released a paid version of its Ernie-powered chatbot for public use, while selling API services provided by Ernie to developers through its cloud computing offerings.

As part of its AI push, Baidu has also stepped up investment in autonomous vehicles. Its Apollo Go robotic axis now operates in several Chinese cities, with the largest fleet of 500 vehicles running in Wuhan.

Although this business has yet to contribute significantly to revenue, Baidu said Apollo Go’s operations in Wuhan are expected to break even by the end of this year.

(Reporting by Yelin Mo in Beijing and Yuvraj Malik in Bengaluru; Editing by Alan Barona and Jason Neely)