(Reuters) – Baidu (NASDAQ:) stated its main place in AI in China means it’s properly positioned to navigate an more and more aggressive market regardless of reporting a decline in quarterly income.

The remark got here amid an AI worth warfare in China, the place firms have slashed costs of huge language fashions used to energy generative AI merchandise.

“Competitors shall be fierce over the following 2 to three years.” Baidu CEO Robin Li stated in an earnings name following the corporate’s Q2 launch.

Li added that the corporate’s Ernie platform handles over 600 million requests to its AI system every day, which he claimed is the best amongst Chinese language firms.

Baidu, China’s dominant search engine, earns most of its income from advertisements. In recent times, it has elevated funding in AI as a part of its transformation right into a “AI firm”.

For the three months ending in June, income dropped 0.4% to 33.93 billion yuan ($4.67 billion), in contrast with analysts’ common estimate of 33.55 billion, LSEG information confirmed.

Baidu’s on-line advertising and marketing enterprise, which generates nearly all of its income, fell 2% to 19.2 billion yuan.

The decline displays a slowing Chinese language economic system nonetheless recovering from a property market stoop, prompting advertisers to tighten their budgets.

Ernie, Baidu’s giant language mannequin platform touted as a rival to OpenAI’s GPT, has been embedded into varied app companies, aiming to enhance person expertise.

The corporate has additionally launched a paid model of its Ernie-powered chatbot for public use, whereas promoting API companies powered by Ernie to builders via its cloud computing choices.

Li stated generative AI contributed 9% to Baidu’s cloud computing income of 5.1 billion yuan in Q2, up from 6.9% in Q1.

As a part of its AI push, Baidu has additionally ramped up funding in autonomous autos. Its Apollo Go robotaxis are actually working in a number of Chinese language cities, with the most important fleet of 500 autos working in Wuhan.

Whereas this enterprise has but to considerably contribute to income, Baidu has stated that Apollo Go operations in Wuhan are anticipated to achieve break-even by the top of this 12 months.

Adjusted internet earnings fell 8% to 7.4 billion yuan however beat the 6.45 billion yuan anticipated by analysts.

U.S.-listed shares of Baidu have been down 3.3% in early buying and selling.

($1 = 7.14 renminbi)