Baidu Sales Slide Most Since 2022 in Fierce China AI Contest (1)

Baidu Inc.’s quarterly revenue fell its most in about three years, hurt by an economic downturn that’s capping its ability to fight bigger rivals in AI and make inroads in newer areas.

The Ernie chatbot creator’s sales in the June quarter fell 4% to 32.7 billion yuan ($4.6 billion), weighed down by a slowdown in its core internet search operations. Net income rose 33%, versus projections for a decline, helped by a boost from long-term investments. The company’s shares slid as much as 3% in Hong Kong Thursday.

China’s internet search leader is betting big on generative AI to ...