By Liam Mo and Zaheer Kachwala
BEIJING (Reuters) -Chinese search engine Baidu reported a 7% fall in quarterly revenue on Tuesday, dragged down by its advertising business amid sluggish demand, although its cloud division posted strong growth. The company reported total revenue of 31.17 billion yuan ($4.38 billion)，compared with estimates of 30.7 billion yuan, according to data compiled by LSEG.
The company’s U.S.-listed shares were little changed in premarket trading.
Baidu is navigating difficult economic conditions in China, marked by a crisis-hit property sector and a trade war with the U.S. that have dampened consumer spending, prompting companies and advertisers to curb tech budgets.
The company is also highly exposed to downturns in ad spending as its core search engine platform is heavily dependent on marketing and ads.
Its cloud business, however, remains a bright spot as Baidu’s artificial intelligence push has attracted companies looking to develop AI agents and utilize large language models in the hopes of boosting growth.
Baidu reported revenue from its online advertising business of 15.3 billion yuan in the third quarter, down 18% from a year earlier.
Its non-marketing revenue, which includes cloud, rose by 21% to 9.3 billion yuan.
The company reported a net loss of 11 billion yuan, compared with a profit a year earlier, largely due to asset write-downs.
Baidu is also heavily focusing on integrating artificial intelligence into its search platform, looking to draw users and establish itself as the dominant force for AI search in China.
The AI market in China is also fiercely competitive with rivals Alibaba and DeepSeek vying for customer and enterprise business.
This has prompted Baidu to ramp up investment in its Ernie large language model by developing reasoning models and upgrading them with enhanced versions.
Baidu is also leaning heavily on its AI and cloud efforts to offset the weakness in online advertising. Last week it unveiled new AI chips to be used for model training and inference as compute demand for artificial intelligence processing continues to soar.
($1 = 7.1119 Chinese yuan renminbi)
(Reporting by Zaheer Kachwala in Bengaluru, and Liam Mo in Beijing; Editing by Susan Fenton)
