HONG KONG — Chinese search engine leader Baidu has begun to take in revenue from its artificial-intelligence-powered, ChatGPT-like service Ernie Bot, the company said Wednesday.

Baidu generated “several hundred million yuan” in the fourth quarter primarily from ad technology improvement and helping companies build their own models, according to Baidu.

“Looking into 2024, we believe this incremental revenue will multiply to several billion yuan, primarily from advertising and AI cloud business,” Robin Li, Baidu’s co-founder and chief executive, said in a conference call with analysts Wednesday.

For the fourth quarter ended December, Baidu reported 34.95 billion yuan ($4.9 billion) in total revenue, up 6% on the year and broadly in line with estimates by analysts surveyed by Refinitiv.

Net income plunged 48% to 2.6 billion yuan as the cost of developing AI mounted. Research and development expenses, which equaled 18% of quarterly revenue, increased 11% primarily due to an increase in server depreciation expenses and generative AI research supporting fees.

AI cloud revenue grew about 11% on the year to 5.7 billion yuan in the fourth quarter, 4.8% of which came from generative AI and foundation models, according to Baidu.

Following the results, Baidu’s shares dipped as much as 7% in New York morning trading.

In China, where Open AI’s ChatGPT is not accessible and most Western websites are blocked, domestic tech companies have been competing to lead the generative AI market in the world’s second-largest economy.

Baidu, as well as some analysts, has claimed that Ernie is the most advanced AI chatbot among its domestic peers. As with online search results, Chinese chatbots also censor answers to politically sensitive questions.

A Nikkei Asia test of Ernie 4.0, the latest generation of Baidu’s chatbot, in December showed that it was still unable to understand and maintain context in some conversations. Like ChatGPT 4, users also need to pay to use Ernie 4.0, while Ernie 3.5 is free for the public to use.

In December, about 26,000 companies were actively using Ernie through Baidu’s application programming interface on a monthly basis, increasing 150% quarter over quarter. Ernie is now handling more than 50 million queries every day, up 190% form the preceding quarter, according to Li.

Meanwhile, starting from January, Baidu’s monetization system has been able to generate real time, text-based ads for search queries, Li said.

While Open AI’s recently released text-to-video model Sora has shocked the Chinese tech community with its level of advancement, Li said Baidu is investing in the visual foundation model realm and will continue to do so. The model can generate video scenes based on users’ text instructions.

“One notably significant application with vast market potential in this realm is autonomous driving… We have been using diffusion and transformers to train our video generator models for self-driving purposes. We have also consistently made strides in object classification, detection and segmentation,” he said.