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{\"0\":\"Another earnings beat is overshadowed by continued advertising decline and projected 18% annual losses\",\"1\":\"Apollo Go robotaxi rides jumped 148% with leadership in left-hand and right-hand drive markets globally\",\"2\":\"AI transformation of Baidu Search to elevate user experience, establish foundation for long-term growth\"}
Baidu ((BIDU - Free Report) ) reported their June quarter last Wednesday and delivered an earnings beat of 9% vs the Zacks Consensus. But a top-line revenue shortfall was a key disappointment for analysts and investors.
And it's as common for BIDU to deliver earnings beats, as it is for the stock to be a Zacks #5 Rank (Strong Sell). In early 2024, both 2025 and 2026 EPS estimates started off between $14 and $15. Now that the full-year 2025 estimate is below $9, you can see the persistent decline in profits as the Chinese company's advertising revenue has dropped off.
So why the beat?
Baidu’s non-GAAP net income actually missed analyst consensus, while non-GAAP EPS beat expectations by a wide margin. The company’s adjusted net income fell short due to higher costs and weaker revenue, but share repurchases reduced the number of outstanding shares, enabling a significant EPS beat even as net income missed estimates. This reflects a scenario where lower net income is offset by financial engineering, resulting in a positive EPS surprise despite an earnings miss.
In the past 90 days, full-year EPS estimates have dropped 10% from $9.61 to $8.66, representing a nearly 18% annual drop in profits vs last year. And the topline is expected to come in flat under $18.5 billion.
Quarter Details
Baidu reported Q2 2025 revenue of RMB 32.7 billion ($4.57 billion), down 4% year-over-year, with adjusted net income dropping 35% to RMB 4.8 billion ($669 million), reflecting ongoing weakness in online advertising.
AI Cloud revenue surged 34% to RMB 10 billion, and Apollo Go robotaxi rides jumped 148%. Online marketing revenue declined 15%, but Baidu maintained a strong cash position (RMB 124.2 billion).
iQIYI's revenue declined by 11% year-over-year to RMB 6.6 billion, missing analyst expectations and reflecting a significant drop compared to Baidu Core, whose revenue fell 2% to RMB 26.3 billion and was much closer to estimates. iQIYI's revenue shortfall was cited as a notable underperformance within Baidu’s segments.
The Baidu AI Frontier
The bright side for Baidu remains in its opportunities with autonomous vehicles and other AI-driven technologies. The Apollo Go growth numbers were exciting for most watchers.
Here were comments from Robin Li, Co-founder and CEO of Baidu...
"In the second quarter, our AI Cloud business continued to deliver robust and healthy revenue growth, supported by our strengthening full-stack AI capabilities and comprehensive end-to-end AI products and solutions. This performance helped mitigate the near-term pressure on online marketing business, as we intensified the AI transformation of Baidu Search to elevate user experience and establish a stronger foundation for long-term growth.
"Apollo Go accelerated global expansion while actively exploring new business models, underscored by our leadership in both left-hand drive and right-hand drive robotaxi markets globally. We remain focused on AI initiatives that offer the greatest long-term value creation potential, where our technology and innovation can make the most meaningful and lasting impact."
Chinese Chip Challenger
In more AI-related news, Reuters reported last week that Chinese semiconductor design firm Kunlunxin, which is backed by Baidu, had won chip orders worth over a billion yuan ($139 million) for telecom firm China Mobile's AI projects.
This is seen as part of the continuing national push for domestic alternatives to NVIDIA ((NVDA - Free Report) ) GPU systems. From the Reuters Refinitiv article on August 22...
"Kunlunxin will supply artificial intelligence chips compatible with Nvidia's CUDA software platform to firms such as H3C Technologies and telecoms equipment maker ZTE that are first-tier suppliers to China Mobile, it said in a statement released late on Thursday."
The article also recalled that in April, "Baidu said it had successfully started running a cluster of 30,000 of its self-developed, third generation P800 Kunlun chips, which can support the training of models similar to Chinese AI startup DeepSeek."
Finally, both BIDU and Alibaba ((BABA - Free Report) ) are trading over 3% higher in the pre-market session as a rally in Chinese stocks is carrying over to US ADRs. BABA will report later this week.
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Bear of the Day: Baidu (BIDU)
Key Takeaways
Baidu ((BIDU - Free Report) ) reported their June quarter last Wednesday and delivered an earnings beat of 9% vs the Zacks Consensus. But a top-line revenue shortfall was a key disappointment for analysts and investors.
And it's as common for BIDU to deliver earnings beats, as it is for the stock to be a Zacks #5 Rank (Strong Sell). In early 2024, both 2025 and 2026 EPS estimates started off between $14 and $15. Now that the full-year 2025 estimate is below $9, you can see the persistent decline in profits as the Chinese company's advertising revenue has dropped off.
So why the beat?
Baidu’s non-GAAP net income actually missed analyst consensus, while non-GAAP EPS beat expectations by a wide margin. The company’s adjusted net income fell short due to higher costs and weaker revenue, but share repurchases reduced the number of outstanding shares, enabling a significant EPS beat even as net income missed estimates. This reflects a scenario where lower net income is offset by financial engineering, resulting in a positive EPS surprise despite an earnings miss.
In the past 90 days, full-year EPS estimates have dropped 10% from $9.61 to $8.66, representing a nearly 18% annual drop in profits vs last year. And the topline is expected to come in flat under $18.5 billion.
Quarter Details
Baidu reported Q2 2025 revenue of RMB 32.7 billion ($4.57 billion), down 4% year-over-year, with adjusted net income dropping 35% to RMB 4.8 billion ($669 million), reflecting ongoing weakness in online advertising.
AI Cloud revenue surged 34% to RMB 10 billion, and Apollo Go robotaxi rides jumped 148%. Online marketing revenue declined 15%, but Baidu maintained a strong cash position (RMB 124.2 billion).
iQIYI's revenue declined by 11% year-over-year to RMB 6.6 billion, missing analyst expectations and reflecting a significant drop compared to Baidu Core, whose revenue fell 2% to RMB 26.3 billion and was much closer to estimates. iQIYI's revenue shortfall was cited as a notable underperformance within Baidu’s segments.
The Baidu AI Frontier
The bright side for Baidu remains in its opportunities with autonomous vehicles and other AI-driven technologies. The Apollo Go growth numbers were exciting for most watchers.
Here were comments from Robin Li, Co-founder and CEO of Baidu...
"In the second quarter, our AI Cloud business continued to deliver robust and healthy revenue growth, supported by our strengthening full-stack AI capabilities and comprehensive end-to-end AI products and solutions. This performance helped mitigate the near-term pressure on online marketing business, as we intensified the AI transformation of Baidu Search to elevate user experience and establish a stronger foundation for long-term growth.
"Apollo Go accelerated global expansion while actively exploring new business models, underscored by our leadership in both left-hand drive and right-hand drive robotaxi markets globally. We remain focused on AI initiatives that offer the greatest long-term value creation potential, where our technology and innovation can make the most meaningful and lasting impact."
Chinese Chip Challenger
In more AI-related news, Reuters reported last week that Chinese semiconductor design firm Kunlunxin, which is backed by Baidu, had won chip orders worth over a billion yuan ($139 million) for telecom firm China Mobile's AI projects.
This is seen as part of the continuing national push for domestic alternatives to NVIDIA ((NVDA - Free Report) ) GPU systems. From the Reuters Refinitiv article on August 22...
"Kunlunxin will supply artificial intelligence chips compatible with Nvidia's CUDA software platform to firms such as H3C Technologies and telecoms equipment maker ZTE that are first-tier suppliers to China Mobile, it said in a statement released late on Thursday."
The article also recalled that in April, "Baidu said it had successfully started running a cluster of 30,000 of its self-developed, third generation P800 Kunlun chips, which can support the training of models similar to Chinese AI startup DeepSeek."
Finally, both BIDU and Alibaba ((BABA - Free Report) ) are trading over 3% higher in the pre-market session as a rally in Chinese stocks is carrying over to US ADRs. BABA will report later this week.