Baidu reports flat Q2 revenue as China’s economic slowdown hits ad spending

(Reuters) -Search engine giant Baidu (NASDAQ:) reported flat quarterly revenue on Thursday, as a sluggish economy weighed on advertiser spending.

Revenue in the second quarter was 33.93 billion yuan ($4.67 billion), compared with analysts’ average estimate of 33.55 billion, LSEG data showed.

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

U.S.-listed shares of Baidu were up more than 1% in premarket trading.

Baidu’s online marketing business, which generates the majority of its revenue, fell 2% to 19.2 billion yuan.

The decline reflects a slowing Chinese economy still recovering from a property market slump, prompting advertisers to tighten their budgets.

The company has in recent years raised 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 app services, aiming to improve user experience.

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

As part of its AI push, Baidu has also ramped up investment in autonomous vehicles. Its Apollo Go robotaxis are now operating in multiple Chinese cities, with the largest fleet of 500 vehicles running in Wuhan.

While this business has yet to significantly contribute to revenue, Baidu has said that Apollo Go operations in Wuhan are expected to reach break-even by the end of this year.

($1 = 7.14 renminbi)