Baidu Bets Big on AI as Traditional Ads Falter

China's search giant Baidu reported mixed third-quarter results that highlight its dramatic pivot toward artificial intelligence. While total revenue slipped 7% to 31.2 billion yuan ($4.3 billion), the company's AI businesses shined brightly.

AI Drives Growth

For the first time, Baidu broke out its AI revenue separately:

• Intelligent cloud infrastructure: 4.2 billion yuan (+33%)
• AI applications: 2.6 billion yuan (+6%)
• AI-native marketing: 2.8 billion yuan (+262%)

The combined 9.6 billion yuan from these segments represents nearly a third of total revenue and grew more than 50% year-over-year.

"We're seeing our AI investments pay off," said CEO Robin Li during the earnings call. "Starting next year, we expect this to become our core growth engine."

Autonomous Driving Accelerates

The star performer was Baidu's autonomous ride-hailing service Apollo Go, which completed:

• 3.1 million rides (up 212%)
• Operating in 22 Chinese cities
• Surpassing 240 million kilometers driven autonomously

The service continues expanding despite regulatory hurdles facing self-driving technology globally.

Advertising Woes Continue

Traditional search advertising remains under pressure:

• Core advertising revenue fell 7%
• Now accounts for less than half of total revenue

The company plans to reallocate resources toward higher-growth areas like intelligent cloud services.

Market Reaction

Investors welcomed the strategic shift:

• Shares rose 4% in pre-market trading
• Market capitalization rebounded to $45 billion

The strong AI performance helped offset concerns about Baidu's legacy businesses.

Key Points

• Baidu's AI revenue surged to 9.6 billion yuan, growing over 50% annually
• Autonomous ride-hailing orders more than tripled to 3.1 million
• Traditional search ads declined as expected amid market shifts
• Company plans for AI to drive majority of growth within three years