Baidu Loses $11 Billion as Investors Demand Proof of AI Gains

Chinese tech giant Baidu Inc. has seen its market value plunge by approximately $11 billion over the past month as investors grow increasingly impatient with the company's artificial intelligence investments.

The search engine heavyweight, which is set to report its December-quarter earnings on Thursday, has witnessed its share price tumble by 20% amid mounting concerns that its aggressive AI spending has yet to deliver meaningful returns.

Analysts tracking the company predict both revenue and profit will decline year-on-year when results are announced, marking a challenging period for one of China's most prominent technology firms.

The disappointing outlook stems primarily from persistent weakness in Baidu's core advertising business, which remains heavily tied to the broader Chinese economy. While the company's cloud division has shown resilience, it has not been sufficient to offset the struggles in its traditional search advertising segment.

Baidu's predicament serves as a stark warning to other Chinese technology firms racing to establish dominance in the artificial intelligence sector. Investors, once content with promises of future AI breakthroughs, are now demanding tangible results and clear evidence that billions spent on AI development will translate into sustainable revenue streams.

The selloff reflects a broader shift in market sentiment toward AI investments globally, where the initial euphoria surrounding artificial intelligence is giving way to scrutiny over actual performance metrics and return on investment.

Market watchers will be closely monitoring Baidu's earnings call for any revised guidance on AI monetisation strategies and management's assessment of when these investments might begin contributing meaningfully to the bottom line.