Declining Revenue Driven by Weak Advertising
China’s leading search engine company,
Baidu, reported a
4% drop in total revenue for the second quarter of 2025, with figures landing at approximately 32.7 billion yuan ($4.56 billion)[1][2][4]. The main cause of this contraction was a steep
15% decline in online marketing revenue, which remains Baidu’s largest business segment, typically contributing about 60% of overall revenues[5]. Analysts attributed this weakness to intensifying competition and continuing headwinds in China’s broader economy[1][3][5].
AI Cloud and Robotaxi Sectors Show Strong Growth
Despite the overall decline, Baidu’s focus on
Qianfan and related
AI cloud services yielded positive results. The company reported a
34% increase in non-marketing revenues to 10 billion yuan, primarily driven by AI Cloud’s expansion[2].
- AI Cloud was named China’s top cloud provider by IDC for the sixth consecutive year, with the Qianfan platform rolling out new AI-native features to support business customers[2].
- Investment in AI technology also supported significant growth in Baidu's robotaxi services, with global deployments accelerating[2].
Profitability and Strategic Shifts
Though revenue fell,
net profit exceeded analyst expectations, rising 33% to 7.32 billion yuan in the quarter[1]. Baidu’s operating income hit 3.3 billion yuan, and its core business operating margin stood at 17%[2]. However, aggressive investment in AI infrastructure and content raised costs, and the company reported negative free cash flow due to these long-term bets[2].
AI Transformation at the Forefront
CEO Robin Li signaled that Baidu’s AI transformation, especially enhancements to Baidu Search and continued focus on
AI Cloud, aims to strengthen the company's user experience and lay a foundation for future growth[1][4]. As competition in China’s online environment heats up and legacy advertising weakens, Baidu is doubling down on AI-native products and global autonomous driving initiatives[2].
Looking Ahead
With advertising revenues under continued pressure, Baidu is increasingly relying on robust AI service expansion and global technological leadership to offset challenges in its traditional segments. The company’s performance this quarter spotlights both the risks and promise as China’s internet and technology landscape shifts toward AI-driven models[2][4][5].
