TLDR
- Baidu reported third quarter revenue of 31.17 billion yuan ($4.38 billion), a 7% decline but beating the 30.7 billion yuan consensus estimate.
- The company’s advertising business collapsed 18% to 15.3 billion yuan as Chinese economic weakness forced marketing budget cuts.
- Cloud and non-marketing revenue jumped 21% to 9.3 billion yuan, driven by strong AI and large language model adoption.
- Baidu posted an 11 billion yuan net loss compared to last year’s profit, mainly due to asset write-downs.
- Earnings per share reached 11.12 yuan, exceeding analyst projections of 8.37 yuan by 2.75 yuan.
Baidu released third quarter results that highlight the growing divide between its legacy and future businesses. The Chinese search giant reported revenue of 31.17 billion yuan ($4.38 billion), down 7% from a year ago.
The figure came in above analyst expectations of 30.7 billion yuan. Shares traded flat in premarket activity following the announcement.
The company’s traditional advertising engine sputtered during the quarter. Online marketing revenue fell 18% to 15.3 billion yuan. China’s economic troubles are hitting businesses hard, forcing them to trim technology and advertising spending.
A crisis in the property sector combined with U.S. trade friction has crushed consumer confidence. Companies are responding by pulling back on marketing investments. Baidu’s search platform relies heavily on advertising dollars, exposing it to these spending cuts.
AI and Cloud Services Shine
Baidu’s cloud division delivered strong performance. Non-marketing revenue, including cloud services, rose 21% to 9.3 billion yuan during the quarter.
The growth reflects Baidu’s successful push into artificial intelligence. Businesses are turning to the platform to develop AI agents and leverage large language models for their operations.
Baidu continues investing aggressively in AI infrastructure. The company unveiled new AI chips last week designed for model training and inference work. These chips target the growing demand for AI computing power across industries.
Competition in China’s AI market remains fierce. Alibaba and DeepSeek are pursuing the same enterprise clients and consumer users. This pressure has pushed Baidu to accelerate development of its Ernie large language model.
The company is building out reasoning capabilities and rolling out enhanced model versions. Baidu also wants to establish itself as China’s dominant AI search platform, integrating artificial intelligence throughout its core search product.
Losses Mount Despite Earnings Beat
Baidu reported an 11 billion yuan net loss for the quarter. The company posted a profit in the same period last year. Asset write-downs accounted for most of the loss.
On a per-share basis, results looked stronger. Baidu delivered earnings of 11.12 yuan, beating the 8.37 yuan consensus by a healthy margin.
The stock has performed well recently. Shares have climbed 32.66% over the past 12 months and gained 30.25% in the last three months.
Analyst sentiment was negative heading into the report. Baidu received 10 downward EPS revisions and zero upward revisions during the 90 days before earnings.
The company’s strategy depends on cloud and AI revenue compensating for advertising weakness. This quarter showed the approach is working to some degree, with cloud growth partially offsetting the ad decline.
China’s economic challenges aren’t going away quickly. The property sector remains troubled and trade tensions with the U.S. continue. These factors will likely keep pressure on advertising budgets in coming quarters.
Baidu’s third quarter revenue of 31.17 billion yuan came in Tuesday morning, with the company posting mixed results across its business segments.
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