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Baidu shares plunged to a near one-year low on Wednesday after the Chinese technology giant reported weaker-than-expected second-quarter results, as declining advertising revenue overshadowed strong growth across its artificial intelligence businesses.
Baidu’s Hong Kong-listed shares dropped 13% to HK$87.95, their lowest level since August 28, 2025. The decline significantly underperformed the Hang Seng Index, which slipped around 0.2%.
The selloff followed Baidu’s second-quarter earnings report released Tuesday. Non-GAAP net income attributable to Baidu reached CNY2.6 billion, roughly 16% below the CNY3.1 billion Visible Alpha consensus estimate. Quarterly revenue totaled CNY31.33 billion, missing expectations of CNY31.95 billion.
Baidu’s core online advertising business remained a major concern. Online marketing services revenue declined 19% year over year to CNY13.1 billion amid continued weakness in advertising demand. Revenue from the company’s legacy operations dropped 23% to CNY10.4 billion, while total Baidu General Business revenue decreased 4% to CNY25.2 billion.
In contrast, Baidu’s AI business continued to expand rapidly. Baidu Core’s AI-powered operations generated CNY12.5 billion in revenue, representing 25% year-over-year growth and approximately half of General Business revenue.
AI Cloud Infrastructure revenue climbed 50% to CNY7.3 billion, while GPU Cloud revenue surged 283% compared with the same period last year. However, the strong AI growth has not yet been enough to fully compensate for declining revenue from Baidu’s traditional search and advertising operations.
Profitability also weakened. Baidu reported non-GAAP diluted earnings of CNY7.22 per American depositary share, down sharply from CNY12.06 a year earlier and below the CNY9.84 consensus forecast.
The results highlight the challenge facing Baidu as it transforms from a search-focused internet company into an AI-first technology business. Investors are increasingly focused on whether Baidu’s fast-growing AI Cloud and GPU operations can become sufficiently profitable to offset structural weakness in online advertising, particularly as competition across China’s artificial intelligence market remains intense.
