• In August 2025, Baidu reported second quarter earnings showing a 4% year-over-year decline in revenue to CNY 32.71 billion, while posting a rise in net income and completing a significant share buyback totaling US$2.23 billion since February 2023. The company also announced a major change to its Hong Kong office location, with headquarters and other contact details remaining the same.

• While Baidu's core online advertising revenue declined and its generative AI plans face increased competition, the company saw double-digit growth in its AI cloud and autonomous driving businesses, reflecting a shift toward expanding non-advertising income sources despite margin pressures.

• We'll examine how the core advertising revenue decline and growing AI business influence Baidu's overall investment outlook.

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Baidu Investment Narrative Recap

To be a Baidu shareholder today, you need confidence in the company's ability to offset shrinking advertising revenue with ambitious bets on AI cloud and autonomous driving, even as short-term earnings face margin pressure and free cash flow challenges. The latest quarterly update confirms strong double-digit growth in non-advertising segments and a significant share buyback, but neither development meaningfully alters the near-term catalyst: proving Baidu can efficiently scale and monetize its AI businesses to support margin recovery. The greatest risk remains persistent weakness in core online marketing revenue, which could weigh on overall profitability if large-scale AI monetization continues to lag expectations.

Among recent announcements, the company’s completion of a US$2.23 billion share buyback stands out, reflecting substantial capital returned to shareholders since early 2023. While this move rewards current holders, it does little to address the company’s fundamental operating challenges, the trajectory of AI commercialization remains central to Baidu’s investment case.

Yet, investors should remain aware that, despite AI’s promise, prolonged margin pressure from slow advertising recovery and delayed AI search monetization could still pose...

Read the full narrative on Baidu (it's free!)

Baidu's narrative projects CN¥150.8 billion in revenue and CN¥22.3 billion in earnings by 2028. This requires a 4.0% yearly revenue growth and a CN¥3.1 billion decrease in earnings from the current CN¥25.4 billion.

Uncover how Baidu's forecasts yield a $99.59 fair value, a 11% upside to its current price.