By Tracy Qu

Chinese search-engine giant Baidu snapped a three-quarter run of falling revenue, posting a rise for the first three months of the year as it develops new growth drivers in AI.

The Beijing-based internet company said Wednesday that first-quarter revenue rose 3.0% to 32.45 billion yuan, equivalent to $4.49 billion. That compared with an estimate of 30.43 billion yuan compiled by FactSet and expectations that revenue would fall as Baidu grapples with weak demand for its core advertising business.

Net profit rose to 7.72 billion yuan from 5.45 billion yuan, beating the 3.745 billion yuan expected by analysts in the FactSet poll.

"AI Cloud continued its robust growth in the first quarter, which provides solid support to our overall revenue while we accelerate the AI transformation across our mobile ecosystem," said Junjie He, Interim CFO of Baidu. "Looking ahead, we are strongly committed to investing in AI to translate our technological strengths into sustainable long-term growth."

Baidu, once the most prominent name among Chinese tech companies, has been struggling to find new avenues of growth in recent years. Slowing demand for advertising--the company's traditional earnings engine--has pushed it into new areas such as AI and autonomous driving.

Investors are focusing on the momentum of Baidu's AI cloud business, viewed as the next big driver of profit. Uncertainties about U.S. tariffs have raised concerns about the pace of adoption among Baidu's cloud customers and the company's AI monetization, Citi analysts said in a recent note.

Baidu's flagship AI product, the Ernie chatbot, made waves when it was released but now faces growing competition from startup rivals such as DeepSeek, as well as other tech giants like Alibaba Group and ByteDance. Ernie Bot's monthly active users ranked eighth in April among Chinese chatbots, according to aicpb.com, a Chinese website that tracks AI products.

In a reflection of its challenges, Baidu's Hong Kong-listed stock was 1.9% lower ahead of the earnings release. Shares of the company are up a modest 4% this year, compared with Alibaba's nearly 50% surge and the Hang Seng Tech Index's 20% jump.

The company is also trying to expand its robotaxi business to more overseas locations. It has been in talks with Switzerland's PostAuto, a unit of Swiss Post that provides public bus services, to launch its Apollo Go robotaxi service in the European nation, The Wall Street Journal reported earlier this month.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

May 21, 2025 06:09 ET (10:09 GMT)

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