Key Highlights
- Fourth quarter net income plunged 66% to 1.78 billion yuan, falling short of Wall Street projections
- Quarterly sales decreased 4% to 32.74 billion yuan, extending a three-quarter downturn
- Revenue from AI-powered operations surged 48%, representing 43% of general business sales
- Autonomous ride service Apollo Go delivered 3.4 million driverless trips, jumping over 200% annually
- Ernie AI platform reached 202 million monthly active users by year-end
The Chinese search giant’s latest quarterly performance disappointed investors, causing American depositary receipts to slide 2.7% to $129.80 during Thursday’s premarket session.
Net income plummeted 66% from the prior year period to 1.78 billion yuan ($259 million). This figure came in substantially below the 2.56 billion yuan consensus forecast from Wall Street analysts.
Quarterly sales contracted 4% to reach 32.74 billion yuan during the October-December period. This represents the third straight quarter where the company has reported declining revenues. The comparable period last year saw Baidu generate 34.12 billion yuan in sales alongside net income of 5.19 billion yuan.
Looking at annual performance, revenue decreased 3% while net income tumbled 76% to 5.59 billion yuan.
The disappointing figures stem primarily from challenges facing Baidu’s core advertising operations, which continue to face headwinds amid China’s challenging economic climate. Reduced consumer spending throughout the country has pressured marketing budgets across multiple industries.
Strong AI Performance Can’t Offset Core Business Weakness
Despite the overall weakness, there were positive developments. Baidu’s artificial intelligence division — encompassing cloud services, self-driving technology, and AI software — posted revenue growth of 48% year-over-year to reach 11.3 billion yuan.
This business unit now represents 43% of total general business revenue, increasing from the 39% share recorded in the previous quarter.
The AI cloud infrastructure segment specifically generated revenue growth of 34% to hit 5.8 billion yuan.
The company’s Ernie AI assistant platform surpassed 200 million monthly active users in December. The service is embedded within both Baidu’s mobile search application and desktop platform.
Meanwhile, Apollo Go autonomous taxi service completed 3.4 million rides without human drivers during the fourth quarter, representing growth exceeding 200% compared to the same period last year.
Chief Executive Robin Li characterized 2025 as “a pivotal year as AI became the new core of Baidu.” While the artificial intelligence metrics demonstrate impressive momentum, they proved insufficient to counterbalance the weakness in traditional advertising revenue.
Future Outlook for BIDU Stock
Baidu revamped its financial reporting format this quarter to emphasize its strategic pivot toward artificial intelligence. The company revealed plans in early February for its inaugural dividend payment coupled with a new $5 billion stock repurchase authorization.
Market analysts have identified a potential public listing of Kunlunxin, the company’s AI semiconductor division, as a possible near-term catalyst. Nomura’s research team indicated such an offering could attract significant investor interest given robust demand for Chinese chip design companies.
BIDU American depositary receipts have declined approximately 16% during the last 30 days and are down more than 6% year-to-date, following a nearly 60% surge throughout 2025.
At last check, BIDU ADRs were changing hands at $129.80, representing a 2.7% decline in premarket trading.
