Baidu to ramp up AI investment on revenue disappointment

Chinese search engine giant Baidu Inc forecast December quarter revenue that fell short of analysts’ estimates as the company ramps up investments in artificial intelligence and autonomous driving technologies.

The company’s U.S.-listed shares fell nearly 12 percent to $230 in extended trading on Thursday.

Baidu said it expects revenue between 22.23 billion yuan ($3.34 billion) to 23.41 billion yuan ($3.52 billion) for its fourth quarter, below analysts’ average estimate of 24.78 billion yuan, according to Thomson Reuters I/B/E/S.

Baidu, part of China’s trinity of tech giants along with Alibaba Group Holding Ltd and Tencent Holdings Ltd, is looking to turn around its fortunes after a series of missteps sparked steep losses in 2016.

The company has shifted funding to focus on artificial intelligence and autonomous driving - industries where it has a rare edge against Alibaba and Tencent.

Baidu has overhauled itself after a scandal over dodgy healthcare adverts last year triggered a regulatory crackdown on online promotion, battering the company’s key ads business.

Net income attributable to Baidu rose to 7.95 billion yuan ($1.20 billion) in the third quarter ended Sept. 30 from 3.10 billion yuan, a year earlier.

Baidu’s total revenue rose to 23.49 billion yuan from 18.25 billion yuan.

($1 = 6.64 yuan)