Baidu’s AI business reached 12.5 billion yuan in second-quarter revenue, accounting for roughly half of Baidu Core sales for the second straight quarter, but the expansion in cloud infrastructure was not enough to offset a steep decline in online advertising.
Total revenue fell 4% from a year earlier to 31.325 billion yuan, Baidu said in its second-quarter results. Revenue was also down 2% from the first quarter, reflecting continued pressure on the company’s core marketing business. Baidu Core, which includes its search, AI cloud, autonomous driving and other main operations, generated 25.183 billion yuan, down 4% year over year.
The earnings show a company moving rapidly toward AI infrastructure while its established advertising engine contracts. Baidu’s cloud operations are growing quickly, particularly demand for graphics processing unit, or GPU, cloud services used to train and run AI models. Yet the smaller growth rate in AI applications and AI-driven marketing indicates that Baidu has not yet translated its infrastructure momentum into equally strong revenue from software and commercial services.
Advertising declines remain the main drag
Online marketing services revenue fell 19% from a year earlier to 13.1 billion yuan, according to Baidu. The category remains a central source of revenue for the company, leaving the overall business exposed to weakness in advertiser demand even as Baidu adds AI products across search and cloud services.
The advertising decline was larger than the drop in Baidu Core revenue, showing that growth elsewhere in the division partly cushioned the pressure. AI-related revenue reached 12.5 billion yuan, matching about 50% of Baidu Core revenue for a second consecutive quarter.
iQIYI, Baidu’s video-streaming subsidiary, reported revenue of 6.287 billion yuan, down 5% year over year. The decline added to the pressure on consolidated sales, although Baidu’s main earnings narrative remained concentrated on the divergence between its falling marketing revenue and accelerating AI cloud business.
Baidu did not provide quarterly or full-year financial guidance in its results.
GPU cloud growth accelerates
AI cloud infrastructure generated 7.3 billion yuan in revenue, up 50% from a year earlier, Baidu said. GPU cloud revenue rose 283% year over year, accelerating from the 184% growth rate reported in the previous quarter.
GPU cloud services supply computing power that corporate customers and developers can rent for AI model training, inference and other intensive workloads. The sharp increase suggests that Baidu has benefited from growing demand for access to high-performance computing capacity, rather than relying solely on its consumer-facing search and advertising products.
The infrastructure business made up the largest portion of Baidu’s disclosed AI revenue. Its 7.3 billion yuan contribution was almost three times the 2.5 billion yuan reported for AI applications, underlining the current shape of Baidu’s AI business: computing services are scaling much faster than software products.
AI applications revenue rose 3% from a year earlier to 2.5 billion yuan. AI-native marketing services, which use AI tools in advertising products, generated 2.6 billion yuan and were roughly unchanged from the prior year.
That uneven performance places pressure on Baidu to turn its cloud capacity and model-development work into services that customers adopt consistently. Infrastructure revenue can expand rapidly when companies secure computing resources, but application and marketing growth would provide a clearer measure of whether AI tools are producing recurring demand across Baidu’s wider commercial ecosystem.
Profit falls despite operating beat
Baidu reported net profit attributable to the company of 2.3 billion yuan during the quarter, with a GAAP net margin of 7%. GAAP diluted earnings per American depositary share, or ADS, were 5.74 yuan, while adjusted diluted earnings per ADS were 7.22 yuan.
The adjusted earnings figure was about 26% below the consensus expectation cited in the supplied results. The gap between revenue trends and operating performance suggests that Baidu continued to manage costs and maintain profitability despite weaker sales in its traditional advertising business.
Adjusted operating profit reached 3.785 billion yuan, while adjusted EBITDA totaled 6.15 billion yuan. Both operating measures came in ahead of expectations cited in the results.
EBITDA, which excludes interest, taxes, depreciation and amortization, is often used to assess the underlying cash-generating capacity of a business. Baidu’s stronger-than-expected adjusted operating figures contrast with the weaker earnings-per-ADS result and point to a quarter in which margins held up better than the bottom-line outcome alone might suggest.
Cash reserves offer room for AI spending
Baidu ended the quarter with 283.1 billion yuan in cash and investments, according to the company. Operating cash flow was 3.4 billion yuan for the period.
The cash position gives Baidu substantial capacity to fund cloud infrastructure, AI model development and related computing expenses while managing a shrinking advertising base. It also reduces immediate pressure for the company to curb investment in GPU capacity just as demand for AI computing services is accelerating.
The results leave Baidu with two sharply different growth profiles inside its core business. Its advertising revenue remains in decline, while AI infrastructure has become a much larger source of sales and is expanding at a far faster rate. The next test will be whether GPU cloud demand can be followed by stronger growth in AI applications and AI-native marketing, where revenue currently remains comparatively modest.
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