Baidu, Inc. reported third‑quarter 2025 results on November 18, 2025, with total revenue of RMB 31.14 billion (US$4.38 billion), a 7% year‑over‑year decline that fell short of the consensus estimate of RMB 31.31 billion. The company’s non‑GAAP diluted earnings per ADS rose to RMB 11.12 (US$1.56), beating the consensus of RMB 7.80 (US$1.10) by 42% and translating into a $0.44 (US$0.04) EPS beat. The revenue miss was driven primarily by an 18% decline in online‑marketing revenue, the core advertising segment, while the AI‑cloud business offset the weakness with a 21% year‑over‑year increase to RMB 6.20 billion.
The AI‑cloud segment grew 21% YoY to RMB 6.20 billion, with the AI‑cloud infrastructure sub‑segment expanding 33% to RMB 4.20 billion. AI‑powered services—such as agents and digital humans—contributed more than half of the AI‑cloud revenue, reflecting the company’s shift toward high‑margin AI‑native products. In contrast, iQIYI’s subscription revenue fell 8% YoY to RMB 3.12 billion, and the company’s Apollo Go robotaxi service accelerated to 212% YoY growth in fully driverless rides, underscoring the broader AI‑driven expansion strategy.
Operating income fell to RMB 2.20 billion (US$310 million), a 1380‑basis‑point contraction in the non‑GAAP operating margin from 20.9% to 7.1% YoY. The margin squeeze was largely a result of increased investment in AI infrastructure and content costs, which rose 12% YoY, and a one‑time impairment charge on long‑lived assets that pushed the company into a net loss of RMB 1.30 billion for the quarter. Despite the margin pressure, the company maintained a positive operating income thanks to the robust growth in its AI‑cloud and AI‑native marketing services.
CEO Robin Li emphasized that AI is “transformative across the portfolio,” noting that the AI‑cloud platform is gaining traction with enterprise customers and that Apollo Go’s global expansion is accelerating. CFO Haijian He highlighted that AI‑powered businesses grew over 50% YoY to roughly RMB 10 billion, and that the company’s new “AI‑native view” of business reporting better reflects the value drivers. He also acknowledged the impairment loss, stating that it was a one‑time charge that does not reflect ongoing operational performance.
Investors reacted positively to the earnings beat and the momentum in AI‑driven businesses. The lack of forward guidance—Baidu did not provide specific revenue or EPS targets for Q4 or the full year—was noted, but the strong profitability and the continued expansion of AI services reinforced confidence in the company’s strategic pivot. Analysts reiterated a “Buy” stance, citing the company’s ability to generate earnings despite a declining advertising base and the growing scale of its AI cloud platform.
The results illustrate a company in transition: while the core advertising business continues to face macro‑economic headwinds and a shrinking demand for online marketing, Baidu’s AI‑cloud and AI‑native services are delivering high‑margin growth that offsets the decline. The impairment charge and the net loss signal short‑term balance‑sheet pressure, but the company’s investment in AI infrastructure and the acceleration of Apollo Go suggest a long‑term focus on high‑return verticals. The earnings beat, coupled with the AI momentum, positions Baidu as a compelling play for investors looking for exposure to China’s AI ecosystem, even as it navigates the challenges of a slowing advertising market.
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