Baidu reports modest revenue growth amid signs search engine giant’s big tilt to AI is beginning to pay off

China search engine and artificial intelligence (AI) giant Baidu reported modest revenue growth in the three months to end-December as the Beijing-based company’s big investments in AI begin to pay off.

Baidu posted revenue of 35 billion yuan (US$4.9 billion) for the quarter, up 6 per cent year on year and in line with consensus analysts’ estimates, according to a filing published on Wednesday. For all of 2023, revenue grew 9 per cent to 134.6 billion yuan.

While the company did not disclose specific revenue from its AI operations, Robin Li Yanhong, co-founder, CEO and chairman of Baidu, noted that Ernie Bot – the Chinese firm’s answer to ChatGPT – achieved “breakthroughs in monetisation” in 2023.

“Throughout 2023, we made significant strides to advance Ernie Bot, reinventing our products and services, and achieving with monetisation,” said Li in the statement, adding that Baidu’s commitment to generative AI would pave the way for new growth engines.

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“In the fourth quarter, we maintained our focus on enhancing operational efficiencies,” said Rong Luo, Baidu’s chief financial officer. “As we look ahead to 2024, our goal is to persistently enhance operational efficiencies and achieve high-quality growth.”

However, net income under global accounting standards came in at 2.6 billion yuan for the quarter, down 48 per cent from the same period a year earlier, and below the average 4.8 billion yuan forecast of analysts surveyed by Bloomberg, partly reflecting the company’s heavy AI investments.

Revenue from its long-format video streaming platform iQiyi was 7.7 billion yuan, up 2 per cent year on year. iQiyi’s monthly average revenue per membership for the quarter was 16 yuan, up from 15.5 yuan in the previous quarter.

Baidu’s shares closed down 1.75 per cent at HK$106.6 on Wednesday in Hong Kong, ahead of the earnings release.