Baidu reported a second-quarter profit shortfall on Tuesday, with non-GAAP earnings per American Depositary Share (ADS) of $7.22 missing Wall Street’s $9.84 estimate by 26.6%. Diluted earnings per ADS on a GAAP basis stood at CNY 5.74, while non-GAAP earnings reached CNY 7.22.
Total revenue for the quarter declined 4% year-over-year to CNY 31.3 billion, missing the $31.95 billion forecast by 1.9%. General business revenue fell 4% annually to CNY 25.2 billion, while Baidu Core’s AI-powered business accounted for CNY 12.5 billion, or half of the total. iQIYI revenue dropped 5% to CNY 6.3 billion. Cost of revenues rose 4% year-over-year to CNY 19.1 billion, though operating expenses fell 17% to CNY 9.2 billion. Operating income totaled CNY 3.0 billion, representing a 10% margin, while non-GAAP operating income reached CNY 3.8 billion with a 12% margin.
Net income attributable to Baidu stood at CNY 2.3 billion, translating to a 7% net margin. Non-GAAP net income was CNY 2.6 billion, or an 8% margin. Cash and investments totaled CNY 283.1 billion as of June 30, with operating cash flow of CNY 3.4 billion. Other income declined sharply to CNY 184 million from CNY 626 million in the prior quarter and CNY 4.9 billion a year earlier, driven by reduced fair-value gains and higher foreign-exchange losses.
Shares fell 9.34% in premarket trading to $94.40, down from a prior close of $104.12, extending a decline from the stock’s 52-week high of $165.30. Nine analysts have revised earnings estimates downward for the upcoming period, according to InvestingPro data.
AI and cloud investments continued to drive growth in key segments. AI Cloud Infrastructure revenue increased 50% year-over-year, while GPU cloud revenue surged 283%, accelerating from 184% growth in the prior quarter. Embodied AI revenue rose approximately six-fold year-over-year, and external customers’ token usage revenue on the Qianfan MaaS platform grew more than nine-fold.
Baidu’s Kunlun AI chips remain central to its strategy, with three generations developed over the past decade. The roadmap includes the M100, optimized for large-scale inference, and the upcoming M300. The company has expanded coverage to newer Chinese foundation models, including Kimi K3, GLM 5.2, MiniMax M3, and Hunyuan 3. The Miaoda Vibe Coding Platform saw monthly active users rise 67% from March to June, while AI DAU penetration in Baidu Wenku and Baidu Drive increased 27.4% year-over-year. Daily active users of the ERNIE Assistant grew 83% year-over-year in June.
Autonomous driving unit Apollo Go delivered about 1 million fully driverless rides in Q2, bringing its cumulative total to over 23 million. The company is expanding globally, focusing on safety, fleet growth, and achieving unit economics breakeven in overseas markets with higher ride prices.
The board approved a plan to transition Baidu’s Hong Kong listing to dual primary status, with the change expected to take effect in 2026 pending regulatory approvals, potentially facilitating southbound Stock Connect inclusion.
