Baidu Inc.’s revenue for the first quarter of 2024 showed the slowest growth rate in more than a year.

The mentioned result is evidence that the company is currently facing difficulties monetizing its leadership in China’s artificial intelligence area amid the economic downturn in the Asian country.

Baidu’s revenue for January-March of the current year was fixed at 31.5 billion yuan ($4.4 billion). This indicator increased by 1% compared to the result for the same period in 2023. The company’s revenue for the first quarter of 2024 is approximately in line with experts’ forecasts.

Baidu’s net income for the first quarter of the current year was 5.4 billion yuan. The mentioned indicator exceeded preliminary expectations. In this case, a significant factor in the impact on the result was the cutting of costs.

After the information on the financial results of the company’s activities for January-March of the current year was released, the price of its shares decreased by more than 1% at pre-market trading in New York.

Baidu is currently the leader in the Chinese internet search area. The company aims to transform its achievements in the sphere of generative artificial intelligence into real revenue. Baidu expects AI to become the driver of its growth in terms of economic indicators. The company also has ambitions to become one of the leaders among global technology conglomerates.

Baidu has already profited from subscription fees for access to its artificial intelligence model called Ernie. Against this background, the company gained an advantage over such players in the Chinese technology sector as Tencent Holdings Ltd. and ByteDance Ltd.

At the same time, the path to significant revenue from activities in the area of generative artificial intelligence for Baidu may turn out to be multi-year. The corresponding prospects are to some extent complicated by the economic downturn that is currently being observed in China. After the launch of Ernie, the company recorded significant financial results, but over time this momentum weakened.

The Chinese economic system is still continuing to overcome the effects of the coronavirus, which have also been exacerbated by other problems. Consumer sentiment is currently deteriorating in the Asian country, which is affected by circumstances such as falling property prices and youth unemployment, which has left the acceptable range.

Analyst Robert Lea says that the financial results for the first quarter of 2024 do not reflect a fundamental turnaround in the company’s prospects, which remains challenging.

Baidu has clearly signaled its commitment to the form of the situation when the developers actively design apps for Ernie. The company compares this model of artificial intelligence with a new computer operating system. Ernie competes with similar digital products from well-funded startups and open-source AI configurations that are free and popular among Chinese developers. One of these open-source artificial intelligence models is Qwen from Alibaba Group Holding Ltd.

In the foreseeable future, Baidu can achieve significant results in the implementation of AI in the autonomous driving area. In this case, commercial indicators are meant. The robotaxi service, which has a fleet of hundreds of fully autonomous cars in major Chinese cities such as Shenzhen and Wuhan, is approaching break-even per vehicle.

As we have reported earlier, Apple Discusses Using of Baidu AI in Chinese iPhones.