Baidu reports surprise revenue jump during China’s AI battle

Revenue for the three months ended March rose 3% to 32.45 billion RMB ($4.5 billion), when analysts expected it to shrink to 31.03 billion RMB. Net income for the same period came at 7.72 billion RMB. The surprise revenue expansion will give the Ernie model creator some breathing room as the company seeks to monetize AI — a shift that undercuts its marquee ad business. Its search platform is now contending with social apps and AI-native browsers for user eyeballs. Online marketing, meantime, remains vulnerable to a slowdown in domestic consumption, exacerbated by uncertainties from the Trump administration’s tariff campaigns. Baidu’s shares are up about 6% in 2025, far trailing peers including Alibaba Group and Tencent after the rise of DeepSeek. Ernie vs DeepSeek: The model competition heats up Like many big tech firms, Baidu counts on generative AI to drive inference demand for its nascent cloud division, which has expanded sales double-digit in recent quarters. It’s also hoping that Ernie will stay competitive with DeepSeek’s state-of-the-art models, seeding an entire ecosystem of AI-native applications. Billionaire founder Robin Li said in April that the company could develop models that were as good as DeepSeek’s but even cheaper, thanks to new computing clusters assembled with in-house chips. The Beijing-based company was the first among Chinese tech leaders to roll out a chatbot modeled after OpenAI’s ChatGPT, but rival apps from ByteDance and Tencent soon took over in popularity. Open-sourced models like Alibaba’s Qwen and DeepSeek have gained greater recognition within the global developer community. The double whammy forced Li’s firm to open-source its models too, and to scrap a short-lived $8 monthly subscription for Ernie Bot. Robotaxis: Baidu’s global expansion blueprint Baidu’s AI commercialization may bear fruit faster in autonomous driving. It operates a fleet of self-driving vehicles that domestic users can hail from an app in big cities like Beijing, Guangzhou and Wuhan. The company is now taking the robotaxi service to global markets including the Middle East and Europe. In terms of search, Baidu is struggling to stem user migration to social-video platforms like Xiaohongshu (also known as RedNote) and TikTok’s Chinese twin Douyin. Even web browsers are becoming AI battlegrounds, as Alibaba and Tencent add built-in agents to their browsers to capture user queries.

Baidu reports surprise revenue jump during China’s AI battle

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Published May 21, 2025

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Baidu reports surprise revenue jump during China’s AI battle