- Baidu Q2 revenue misses estimates
- Li vows Ernie AI revival
- Shares drop 7% in early trading
Aug 18 (Reuters) - Baidu, CEO Robin Li vowed on Tuesday to bring the company's Ernie large language model back to the frontier of AI, after the Chinese tech company posted quarterly revenue that missed Wall Street estimates.
"In a market like this, we believe long-term competitiveness ultimately comes down to sustained technology investment, application-driven approach, and patience," Li told analysts, adding that Baidu would keep investing in top talent and technology to regain its edge.
His remarks come as Baidu faces mounting questions over its position in China's AI race.
Its Ernie large language model has gone months without a major upgrade, while competitors such as Alibaba and Moonshot have continued to roll out newer versions of their models.
The competitive pressure compounds challenges in Baidu's core business.
COMPANIES CUT MARKETING SPEND
The company reported a 4% decline in revenue to 31.33 billion yuan ($4.7 billion) in the second quarter, short of analysts' average estimate of 31.96 billion yuan, according to data compiled by LSEG.
Its U.S.-listed shares are down 7% in early trading.
A prolonged downturn in China's property sector and weak consumer spending have led businesses to cut marketing budgets, weighing on advertising demand and pressuring Baidu's online marketing business.
Baidu's online marketing services segment reported total revenue of 13.1 billion yuan in the quarter ended June, down 19% from a year ago.
The bright spot remained its AI-linked businesses, as corporate adoption of AI drove demand for Baidu's cloud infrastructure.
Revenue from its Core AI-powered business, which includes cloud computing and AI applications, rose 25% year-on-year to 12.5 billion yuan.
Still, Baidu has been increasing its spending on AI infrastructure and personnel, which analysts say could continue to pressure margins even as AI-related revenue grows.
Net income for the quarter was 2.3 billion yuan, down from 7.3 billion a year earlier.
($1 = 6.7423 Chinese yuan renminbi)
Reporting by Harshita Mary Varghese in Bengaluru and Liam Mo in Beijing; Editing by Kate Mayberry and David Holmes
Source: Reuters