Baidu Q3 Sales Surpass Expectations Despite 7% Drop, Cloud Business Affected by Sluggish Performance amid AI Push

百度第三季度销售额表现强劲，但在人工智能推动下的记录性下滑7%，同时受到云计算发展疲软的影响，尽管面临挑战，百度仍在人工智能领域持续投入并取得进展。

TMTPOST -- The American depositary receipts (ADRs) of Baidu, Inc. rallied nearly 2.7% on Tuesday after Chinese search engine behemoth posted financial results highlighting its strong artificial intelligence (AI) push is still clouded by sluggish advertising business amid the macroeconomic headwinds.

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The decline in Baidu’s top line intensified for the quarter ended September 30. Revenue slumped 7.1% year-over-year (YoY) to RMB31.17 billion ($4.4 billion), still better than analysts projected RMB30.87 billion polled by Bloomberg. Baidu delivered its biggest quarterly decline in revenue on record, according to Wind data dating back to 2006. That was Baidu’s second straight quarterly fall following a 4% drop for the second quarter, in which the company reversed the upward trend in a year.

Baidu’s bottom line tumbled less than Wall Street feared. On non-GAAP basis, adjusted earnings per American depositary share (ADS) for the third quarter shed 33% YoY to RMB11.12, or $1.56. Analysts expected the EPS to be $1.08 following a 35% decrease three months earlier. Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, dived 49% YoY to RMB4.43 billion, ahead of expected RMB41.6 billion after a 29% YoY decrease for the previous quarter.

Baidu swung to a net loss of RMB11.23 billion from profit of $7.63 billion a year earlier, dampened by a RMB16.2 billion impairment charge for long-lived assets related to Core asset group. Excluding the asset write-downs, non-GAAP net income tumbled 67% YoY to RMB3.84 billion after a 35% fall in profit for the second quarter.

Baidu’s core search engine platform, once a dominant cash generator which is heavily dependent on marketing and ads, has not showcased improvement yet.

Baidu Core, which marks up around 79.2% of overall revenue for the September quarter, brought RMB24.7 billion, representing a 7% YoY fall after a 2% decrease for the preceding quarter. Revenue from online marketing, a major part of Baidu Core, plunged 18% YoY to RMB15.3 billion. That decline was steeper than the June quarter seeing a 15% YoY dip, highlighting intense competition and headwinds amid worries about faltering demand in China.

However, AI maintained a key drive with a double-digit growth rate of revenue. Non-online marketing revenue, mainly driven by the boost of AI Cloud business, surged 21% YoY to RMB9.3 billion after a YoY advance of 34% for the second quarter.

Baidu management for the first time disclosed revenue from its AI-powered businesses. “Our strategic AI investments are yielding strong returns. Revenue from AI-powered businesses grew over 50% YoY to roughly RMB10 billion in the third quarter of 2025, laying a solid foundation for sustainable long-term growth," said the Chief Financial Officer (CFO) He Haijian in a statement.

Revenue from AI Cloud Infra, the AI infrastructure and platform services within Baidu’s AI Cloud serving the public and private sectors, raked in RMB4.2 billion, up 33% YoY. In particular, subscription-based revenue from AI accelerator infrastructure growing 129% YoY, becoming the primary driver of AI Cloud’s expansion.“AI Cloud achieved healthy expansion in the third quarter, cushioning the impact from softness in our online marketing business,”commented He.

As another highlights for the third quarter, Apollo Go, Baidu's autonomous ride-hailing service, maintained a triple-digit growth. It provided 3.1 million fully driverless operatioinal rides in the September quarter of 2025, accelerating to a 212% YoY growth from a rate of 148% for the prior quarter. In October, Apollo Go’s weekly average fully driverless rides topped 250,000. As of November, the cumulative rides provided to the public by Apollo Go surpassed 17 million.

“In the third quarter, we demonstrated AI's transformative value across our portfolio. AI Cloud maintained solid growth momentum, driven by broadening enterprise adoption of our AI products and solutions,” said Baidu CEO Robin Li, or Li Yanhong. “Apollo Go significantly accelerated the scaling of its fully driverless operations and kept advancing global expansion, including entry into Switzerland, all while maintaining industry-leading safety standards. ”

Li on an earnings call stressed the strategic importance of AI applications, stating "AI is driving transformative value across our business." He noted ERNIE not only represents the cutting edge of our AI technology but also serves as the backbone behind much of the AI-driven innovations across our businesses. Li also suggested the potential of Apollog Go as "Robotaxi has reached a tipping point both here in China and in the U.S."