(Yicai) Nov. 22 -- Baidu’s shares slid after the Chinese tech colossus said third-quarter profit rose while revenue declined for the second quarter in a row, as strong growth in its artificial intelligence cloud division offset sluggish online advertising.

Baidu [HKG: 9888] closed 8.6 percent lower at HKD76.65 (USD9.85) a share in Hong Kong today. Its New York-listed stock [NASDAQ: BIDU] fell 5.9 percent to USD81.63 yesterday.

Net profit rose 14 percent to CNY7.6 billion (USD1.1 billion) in the three months ended Sept. 30 from a year earlier, according to the Beijing-based company's earnings report released yesterday. Revenue fell 3 percent to CNY33.6 billion (USD4.8 billion).

Profit at Baidu Core, the main business segment which provides online marketing services and non-marketing value-added services, jumped 17 percent to CNY7.5 billion, while revenue was unchanged at CNY2.5 billion.

“Baidu Core's flattish third quarter top line reflected the ongoing weakness in our online marketing business, offset by the growth of our AI Cloud business,” Robin Li, the firm’s co-founder and chief executive, said in a statement.

Online marketing income fell 4 percent to CNY18.8 billion, and non-online marketing revenue rose 12 percent to CNY7.7 billion, mainly driven by the AI Cloud business. Baidu's main AI product is the large language model Ernie Bot.

AI Cloud Revenue

Income at the AI Cloud business rose 11 percent to CNY4.9 billion, thanks to the sustained momentum of generative AI, which contributed to about 11 percent of the total, Li said on the company’s earnings conference call.

"Thanks to Ernie's enhanced capabilities, wide-ranging applications, and improved cost efficiencies, we've seen a substantial increase in application programming interface calls," Li pointed out.

"In November, Ernie handled approximately 1.5 billion API calls daily, a significant jump from 600 million in August," he added. "Meanwhile, over 1.7 trillion tokens were generated on a daily basis.

"The surging API call volume and token generation demonstrate strong market adoption of Ernie, validating its value in real-world applications," Li noted.

Baidu expanded the Ernie family in the third quarter, launching two enhanced lightweight models: Speed Pro and Lite Pro. It plans to release a new version of the core model early next year, Li disclosed.

"Despite the near-term pressures, we remain steadfast in our AI-focused strategy and are confident in our long-term trajectory," Li noted. "As we further scale AI, we are emboldened to find how it can drive innovations and create value for consumers, enterprises, and society at large.”

Robotaxi Progress

Baidu also released updates yesterday about its autonomous ride-hailing service provider Apollo Go. In the quarter, Apollo Go provided about 988,000 driverless rides, up 20 percent from a year earlier and accounting for more than 70 percent of China's total in the period.

"In intelligent driving, Apollo Go continues to lead the global autonomous ride-hailing market, hitting another milestone with our sixth-generation autonomous vehicle now operating on public roads across multiple cities in China," Li said.

Editor: Futura Costaglione