Baidu, Inc. (BIDU) Stock: Drops as Cloud and Robotaxi Growth Offsets Revenue Decline

TLDR

• Baidu shares slip as ad revenue dips, but AI Cloud and robotaxi surge ahead

• Baidu’s AI Cloud booms 34% amid ad slump; global robotaxi rollout accelerates

• Despite revenue dip, Baidu leans into AI and global robotaxi expansion

• Baidu Q2: Cloud climbs, ads fall, robotaxi rides double—AI remains the core

• AI boosts Baidu’s future as Q2 shows cloud growth, robotaxi scaling, profit rise

Baidu, Inc. (NASDAQ: BIDU) shares dropped 3.44% to $86.01 by 11:22 AM EDT following its Q2 2025 earnings report.

Baidu, Inc. (BIDU)

The results showed strong growth in AI Cloud and robotaxi services, though total revenues declined year over year. Despite this, Baidu emphasized its focus on long-term AI investments and international autonomous driving expansion.

AI Cloud Revenue Grows While Online Marketing Contracts

Baidu reported Q2 2025 total revenues of RMB32.7 billion ($4.57 billion), a 4% decline from the same quarter last year. Baidu Core’s revenue dropped 2% to RMB26.3 billion, mainly due to a 15% decline in online marketing income. However, non-marketing revenue climbed 34% to RMB10 billion, led by AI Cloud expansion.

According to IDC’s 2024 market report, AI Cloud remained the top-ranked provider in China for the sixth year. Baidu’s Qianfan platform integrated new models and tools to support the development of AI-native applications. This momentum helped balance revenue losses in Baidu’s traditional advertising segments.

Costs rose due to increased AI Cloud deployment and content investments, raising the total cost of revenue by 12% to RMB18.4 billion. Operating income reached RMB3.3 billion, while Baidu Core’s non-GAAP operating margin stood at 17%. Despite profitability in core operations, the company posted a negative free cash flow due to AI investments.

Apollo Go Expands Globally Amid Rising Robotaxi Adoption

Apollo Go, Baidu’s autonomous ride-hailing unit, continued rapid expansion with over 2.2 million fully driverless rides in Q2. This marked a 148% year-over-year increase, pushing cumulative rides past 14 million by August. Its global footprint reached 16 cities, including new testing zones in Hong Kong and the UAE.

In July, Apollo Go announced a multi-year partnership with Uber to deploy its autonomous vehicles across Asia and the Middle East. A similar deal with Lyft followed in August, targeting initial deployment in Germany and the UK. Both alliances aim to scale operations to thousands of vehicles in coming years.

Apollo Go’s aggressive testing and city expansions reinforce Baidu’s leadership in both left- and right-hand drive robotaxi markets. These developments offer growth potential but require sustained investment and regulatory support. Baidu remains confident that international scaling will generate long-term returns.

Search and Mobile Ecosystem Transition Toward AI Integration

Baidu’s transformation of its mobile search ecosystem showed rapid progress in Q2 2025. By July, 64% of mobile search results included AI-generated content, up from 35% in April. This shift replaced traditional link-based results with structured, multimodal-first AI outputs.

The Baidu App reached 735 million monthly active users in June, marking a 5% annual increase. Managed Page contributed to 50% of Baidu Core’s online marketing revenue, highlighting the structural shift underway. This AI-centric pivot aims to boost user engagement and platform monetization over time.

While AI-led innovation reshaped the mobile ecosystem, online advertising continues to face short-term headwinds. However, Baidu remains committed to evolving its platforms to maintain user relevance. Leadership emphasized AI as the foundation for future revenue diversity and product competitiveness.

Net Income Rises Despite Mixed Revenue Signals

Net income attributable to Baidu reached RMB7.3 billion ($1.02 billion), with diluted earnings per ADS at RMB20.35 ($2.84). The company posted substantial non-operating income of RMB4.9 billion due to gains from long-term investments. Meanwhile, R&D expenses fell 13%, reflecting streamlined personnel costs.

Baidu returned $677 million to shareholders in 2025 under its ongoing buyback program, totaling $2.3 billion since 2023. Despite negative free cash flow, the company reported a solid net cash position of RMB155.1 billion ($21.66 billion). Liquidity remained robust, providing a cushion for strategic AI investment.

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