Baidu (BIDU) Stock: 7% Revenue Drop as Ad Slowdown Cancels Out Cloud Gains

TLDR

• Baidu posted Q3 revenue of 31.17 billion yuan ($4.38 billion), down 7% year-over-year but above the 30.7 billion yuan analyst forecast.
• Online advertising revenue plunged 18% to 15.3 billion yuan as Chinese companies reduced marketing spending during economic uncertainty.
• Cloud and AI revenue surged 21% to 9.3 billion yuan, fueled by growing enterprise demand for large language models.
• The company recorded an 11 billion yuan net loss versus a year-ago profit, primarily from asset write-downs.
• Earnings per share hit 11.12 yuan, crushing analyst estimates of 8.37 yuan by 2.75 yuan.

Baidu delivered a tale of two businesses in its third quarter results. Revenue came in at 31.17 billion yuan ($4.38 billion), marking a 7% decrease from last year. The number still topped Wall Street’s expectations of 30.7 billion yuan.

The search engine operator’s advertising division continued its downward trajectory. Marketing revenue dropped 18% to 15.3 billion yuan as China’s economic troubles deepened.

A struggling property market and U.S. trade tensions have squeezed consumer wallets. Businesses responded by slashing their technology and advertising budgets. Baidu’s search platform depends heavily on ad dollars, making it vulnerable to these cutbacks.

Cloud Business Powers Forward

The cloud division painted a brighter picture. Non-marketing revenue, which covers cloud services, climbed 21% to 9.3 billion yuan.

Baidu’s artificial intelligence investments are paying off in this segment. Companies are flocking to the platform to build AI agents and tap into large language models.

The company keeps pushing deeper into AI territory. It recently launched new chips built specifically for AI model training and inference. Demand for AI computing continues to climb across the industry.

Baidu faces tough competition in China’s AI space. Alibaba and DeepSeek are fighting for the same enterprise and consumer customers. This rivalry has forced Baidu to ramp up spending on its Ernie large language model.

The company is developing reasoning capabilities and releasing upgraded versions to stay ahead. It’s also working to make its search platform the go-to destination for AI-powered queries in China.

Financial Results Tell Mixed Story

Baidu reported a net loss of 11 billion yuan for the quarter. This contrasts with a profit in the same period last year. Asset write-downs drove most of the loss.

The earnings picture looked better. Baidu posted 11.12 yuan per share, beating the 8.37 yuan analyst consensus by a wide margin.

Investors have been kind to the stock lately. Shares have jumped 32.66% over the past year and gained 30.25% in the last three months.

Analysts weren’t as optimistic heading into the report. The company saw 10 downward EPS revisions in the 90 days before earnings, with zero upward adjustments.

Baidu’s strategy banks on AI and cloud growth making up for advertising weakness. The company unveiled its new AI chips last week as part of this push.

China’s economic headwinds aren’t letting up. The property crisis continues to drag on consumer confidence. Trade friction with the U.S. shows no signs of easing.

The third quarter results arrived on Tuesday with Baidu’s U.S.-listed shares showing little movement in premarket trading.

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