Baidu reports third straight revenue decline as AI-first strategy struggles to gain traction

Baidu Sales Shrink for Third Consecutive Quarter on Its AI Lag

Baidu Inc. reported a drop in its revenue for the third consecutive quarter, underscoring the magnitude of weakness in its core advertising and AI businesses. Revenue declined 4% to 32.74 billion yuan ($4.8 billion) for the December quarter, compared with an average analyst projection of 32.66 billion yuan. The lackluster sales suggested China's search leader is struggling to find its footing in the white-hot AI race while losing ground in its traditional cash cow of advertising. While the company was among the first in China to roll out a ChatGPT-like chatbot, it has since yielded its leadership to larger rivals including Alibaba Group Holding Ltd. and nimble up-and-comers like DeepSeek. Its flagship mobile app also faces a crisis of irrelevancy among younger users, who prefer social apps like Xiaohongshu for search queries. Baidu is navigating a difficult transition from an online marketing firm to an AI-first company. It is trying to embed AI into its services from search to maps, mirroring the efforts by Alphabet Inc.'s Google to integrate its Gemini model into a wide range of products. The Beijing-based company unveiled its latest model in November. While Ernie 5.0 Thinking scored an above-average rating on benchmarking site Artificial Analysis, it was eclipsed by a long list of Chinese open-source models. The company joined Big Tech rivals in a $700 million cash giveaway during the holiday period to lure users to its AI apps. But its 500 million yuan outlay fell behind peers like Alibaba and Tencent Holdings Ltd., which leveraged vast social media and online commerce ecosystems to cross-sell services. What Bloomberg Intelligence Says Baidu faces a difficult future financially, with its AI ventures set to lose money for at least the next three years. The potential spinoff and IPO of Baidu's KunlunXin chip business has no impact on Baidu's near-term earnings prospects. -Analysts Robert Lea and Jasmine Lyu Still, Baidu made some early gains from the red-packet campaign. Monthly active users of Baidu's AI assistant within its search app grew fourfold year-over-year, the company said in a statement on Feb. 10. The AI boom has also helped propel Baidu's cloud business to outgrow other units and boost the prospects of its semiconductor arm. Baidu's chip unit, Kunlunxin, has hired banks for an initial public offering in Hong Kong as investors seek local alternatives to Nvidia Corp. chips amid escalating geopolitical tensions. Baidu itself is considering upgrading its Hong Kong listing to primary status to hedge against unfavorable US policies, Bloomberg News has reported. Like many Chinese firms, Baidu is trying to chase future growth in overseas markets, faced with a prolonged economic slowdown at home. It has expanded its robotaxi operations to the Middle East and Europe, accelerating an international push that could yield profit sooner than generative AI. The internet giant earlier this month announced plans for its first dividend alongside a $5 billion, three-year stock buyback program to boost shareholder returns.

Why Is Baidu Stock Falling Thursday? - Baidu (NASDAQ:BIDU), iQIYI (NASDAQ:IQ)

China's Search Giant Baidu Struggles With Weak Ad Spending Despite AI Push Baidu, Inc. (NASDAQ:BIDU) shares slipped after the company reported its fourth-quarter results on Thursday. The company reported quarterly revenue of $4.682 billion (32.7 billion Chinese yuan), a decrease of 4% year-on-year (Y/Y). The analysts' consensus estimate stood at $4.680 billion. A Reuters report said China's largest search engine operator, Baidu, posted a 4% decline in revenue for the December quarter, as continued weakness in its core advertising business weighed on results, partially offset by strong growth in its cloud segment. The quarterly revenue rose 5% quarter-on-quarter, primarily due to an increase in Baidu Core AI-powered Business. Baidu's adjusted earnings per American Depositary Share (ADS) came in at $1.52, exceeding the forecast of $1.12. AI Cloud and Applications Drive Growth Baidu delivered solid fourth-quarter 2025 revenue across its AI Cloud, AI Applications, and AI-native marketing segments, alongside continued Robotaxi growth. AI Cloud Infra generated 5.8 billion yuan in fourth-quarter revenue, with subscription-based AI accelerator infrastructure revenue rising 143% Y/Y. AI Applications produced 2.7 billion yuan in fourth-quarter revenue. Baidu also formed the Personal Super Intelligence Business Group to integrate Baidu Wenku and Baidu Drive and advance AI application development. AI-native marketing services generated 2.7 billion yuan in fourth-quarter revenue, up 110% Y/Y. Apollo Go and Autonomous Driving Expansion Meanwhile, Apollo Go completed 3.4 million fully driverless rides in the quarter, up more than 200% year over year, as cumulative rides surpassed 20 million by February 2026. In terms of expenses, Baidu reported a 10.6% Y/Y increase in Selling, General, and Administrative (SG&A) expenses, totaling $1.06 billion. This rise was primarily due to an increase in expected credit losses. The company's Research & Development (R&D) expenses rose by 1.4% Y/Y to $800 million. Baidu's adjusted EBITDA margin dropped to 14% from 20% Y/Y. Cash Position, Buyback and Dividend Policy As of December 31, 2025, Baidu maintained a solid cash position with $42.06 billion in cash and equivalents. The company generated a free cash flow of $91 million during the quarter. Excluding the iQIYI business, Baidu's free cash flow outflow was slightly less, at $87 million. Recently, the company authorized a new share repurchase program of up to $5 billion and introduced its first dividend policy, with an initial payment potentially by the end of 2026. CEO Commentary on AI-First Strategy Baidu Co-founder and CEO Robin Li said 2025 marked a turning point as artificial intelligence became central to the company's strategy. He highlighted strong momentum in AI Cloud Infrastructure, driven by Baidu's full-stack AI capabilities and rising enterprise adoption. He said the company expanded its AI application portfolio to serve both enterprise and individual users, while Apollo Go strengthened its global leadership and accelerated international expansion. He also noted continued growth in AI-native Marketing Services and expressed confidence that Baidu's AI-first strategy will create long-term value. Price Action: Baidu shares were down 4.01% at $127.33 during premarket trading on Thursday, according to Benzinga Pro data. iQIYI shares were up 1.13% at $1.79. Photo by Tada Images via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Baidu Profit Drops as Revenue Decline Continues -- Update

Baidu reported sharply lower profit, with revenue declining for a third straight quarter, as the Chinese search giant continued to struggle to transform its businesses in the AI era. Once considered one of China's important technology titans alongside Alibaba and Tencent, Baidu has been facing pressure on both its top and bottom lines as its main advertising business slows. Seeking new avenues of growth, the internet company has been investing heavily in fields such as artificial intelligence, self-driving technology and chip development. Baidu restructured its earnings report for the final quarter of 2025, underscoring its focus to become an AI-driven company. The Beijing-based company on Thursday said fourth-quarter net profit dropped 66% from a year earlier to 1.78 billion yuan, equivalent to $259.1 million. Analysts had estimated 2.56 billion yuan, according to a FactSet consensus. Revenue continued to decline, as expected, falling 4.0% to 32.74 billion yuan in the three months ended December. Compared with the third quarter, revenue increased 5.0%. For the full year, revenue slipped 3%, while net profit slumped 76% to 5.59 billion yuan. Baidu highlighted some progress in its results, including 48% revenue growth in its AI-powered business, which accounted for 43% of general business revenue in the fourth quarter, up from 39% in the third quarter. Revenue from its AI cloud infrastructure segment rose 34% to 5.8 billion yuan, it said. "2025 marked a pivotal year as AI became the new core of Baidu," Chief Executive Robin Li said. "Our portfolio of AI applications continued to scale, addressing diverse needs across enterprises and individuals." The company said Apollo Go, its autonomous ride-hailing service, completed 3.4 million driverless operational rides in the fourth quarter, with total rides increasing by more than 200% year over year. Meanwhile, the company's AI assistant, Ernie, integrated into its flagship Baidu search-engine app and on personal computers, reached 202 million monthly active users in December, crossing the 200 million MAU milestone. Still, Baidu's Hong Kong-listed shares have lost steam this year, declining by more than 6% after a nearly 60% jump in 2025. The company earlier this month announced plans for its first-ever dividend and authorized a new $5 billion share-buyback program to boost shareholder returns. Analysts said ahead of the results that the proposed spinoff of Baidu's AI chip unit, Kunlunxin, one of the company's most valuable assets, could be the next catalyst for the stock. Given the performance of recently listed Chinese chip designers, Kunlunxin's IPO could be well-received by investors, Nomura analysts said in a recent note.