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Baidu Revenue Misses as Advertising Slide Outweighs AI Cloud Gains

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Baidu reported weaker-than-expected second-quarter revenue as a sharp decline in its traditional advertising business outweighed strong growth in AI-related cloud services.

The Chinese technology company generated 31.33 billion yuan ($4.65 billion) in quarterly revenue, down 4% from a year earlier and below analyst expectations of 31.96 billion yuan. Its U.S.-listed shares fell around 3.5% in premarket trading following the results.

Baidu’s online marketing business remained the biggest drag, with revenue falling 19% year over year to 13.1 billion yuan. Weak consumer spending and the prolonged downturn in China’s property market have pushed many companies to reduce advertising budgets.

By contrast, Baidu’s Core AI-powered Business continued to expand, with revenue rising 25% to 12.5 billion yuan as companies increased spending on cloud infrastructure and AI applications.

The company is investing heavily in AI infrastructure and talent, which could continue to pressure profitability even as AI-related revenue grows. Baidu also faces intensifying competition from Chinese rivals including Alibaba and ByteDance, which have accelerated the release of new AI models and services.

Baidu Revenue Falls on Ad Weakness

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Baidu reported a decline in quarterly revenue as continued weakness in its advertising segment outweighed gains from its growing cloud and artificial intelligence operations.

The company has expanded investment in AI infrastructure and enterprise-focused services, contributing to stronger performance in its cloud-related offerings. However, advertising—still its primary revenue source—remained under pressure amid softer economic conditions and reduced marketing spending.

Baidu indicated that AI-driven services are becoming an increasingly important part of its business strategy, with enterprise demand rising across sectors.

Despite the revenue dip, the company’s AI-powered divisions accounted for a larger share of overall performance, reflecting ongoing transformation toward technology-led growth.

Leadership reaffirmed commitment to sustained AI investment while also introducing new shareholder-focused initiatives, including plans for a dividend and continued share repurchases.

Baidu’s AI Chip Unit Kunlunxin Files Confidentially for Hong Kong IPO

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Baidu said on Friday that its artificial intelligence chip arm, Kunlunxin, has confidentially filed a listing application with the Hong Kong Stock Exchange on January 1, paving the way for a potential spin-off and separate public listing.

The move follows an earlier report by Reuters that Kunlunxin was preparing for a Hong Kong initial public offering after completing a fundraising round that valued the unit at around 21 billion yuan ($3 billion). While the filing marks a key step toward a listing, Baidu said details such as the size and structure of the offering have not yet been finalised.

Kunlunxin was founded in 2012 as an internal Baidu unit focused on developing AI chips to support the company’s core businesses. Over time, it has become independently operated, although Baidu continues to hold a controlling stake. Following the proposed spin-off, Kunlunxin is expected to remain a subsidiary of Baidu. The company added that while Kunlunxin still mainly supplies chips to Baidu, it has expanded external sales over the past two years.

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The planned listing comes as China accelerates efforts to develop domestic alternatives to U.S. semiconductors amid tightening export restrictions from Washington on advanced chips. In this context, several Chinese AI and semiconductor companies have either launched or announced plans for public offerings.

Earlier this week, Chinese AI startup MiniMax said it expects to raise up to HK$4.19 billion ($538 million) in its Hong Kong IPO. Meanwhile, semiconductor designer Shanghai Biren Technology raised HK$5.58 billion in its public offering, according to an exchange filing. Other semiconductor specialists, including OmniVision Integrated Circuits and GigaDevice Semiconductor, have also begun bookbuilding for IPOs, each aiming to raise about $600 million.

Hong Kong’s equity capital markets have seen a strong rebound. The city raised $36.5 billion from 114 new listings in 2025, its strongest performance since 2021 and more than triple the $11.3 billion raised in 2024, according to data from LSEG.