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Baidu revenue misses expectations as advertising weakness offsets AI cloud growth
Second-quarter revenue fell to 31.33 billion yuan, while Baidu’s core AI business rose 25% year over year to 12.5 billion yuan.
Baidu shares fell 3.5% in pre-market trading after the Chinese technology group reported second-quarter revenue that came in below Wall Street expectations, as weakness in its advertising business outweighed growth from AI-related units. The company posted quarterly revenue of 31.33 billion yuan, down 4% year over year, compared with the 31.96 billion yuan average analyst estimate compiled by LSEG. Online marketing services revenue totaled 13.1 billion yuan for the quarter ended June, a 19% decline from the prior-year period, with Baidu citing a difficult economic backdrop in China and softer consumer and property-related spending.
Baidu said its Core AI-powered business, which includes cloud computing services and AI applications, grew 25% year over year to 12.5 billion yuan. The company attributed the expansion to growing corporate adoption of artificial intelligence, which has increased demand for its cloud infrastructure.
The update also highlighted a key trade-off for profitability, as analysts have warned that Baidu’s elevated spending on AI infrastructure and talent could continue to weigh on profit margins even as AI-linked revenue rises. Baidu is also working to reduce its reliance on the traditional online marketing business, the area now under pressure.