Baidu Profit Plunges 42% as AI Push Erodes Core Ad Business
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Baidu’s headquarters in Beijing. Photo: VCG
Baidu Inc. posted a steep 42% drop in quarterly profit, signaling that its aggressive pivot toward artificial intelligence is cannibalizing its core advertising business faster than it can generate new growth.
The Beijing-based search giant reported a 4.1% year-on-year decline in revenue to 32.7 billion yuan ($4.7 billion) for the fourth quarter of 2025, marking its second consecutive quarter of shrinking topline figures.
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- Baidu’s Q4 2025 profit fell 42% and revenue dropped 4.1% to 32.7 billion yuan; full-year revenue decreased 3% to 129.1 billion yuan, with adjusted net profit down 30%.
- AI Cloud revenue grew 34% in 2025 to 30 billion yuan, but core search advertising revenues and app user numbers declined.
- Apollo Go rides surged 200% year-on-year; Baidu’s AI chip unit Kunlunxin filed for a Hong Kong listing.
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Who’s Who
- Baidu Inc.
- Baidu Inc. experienced a challenging Q4 2025, with a 42% drop in quarterly profit and a 4.1% revenue decline to 32.7 billion yuan. This signals that its AI transition is impacting its core advertising business, which has been under pressure since Q2 2024. While AI Cloud revenue grew 34% in 2025, overall revenue slid 3% for the full year. The company's autonomous driving unit, Apollo Go, showed strong growth, completing 3.4 million rides in Q4.
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What Happened When
- Second quarter of 2024：
- Baidu’s core search-based advertising business first faced sustained pressure due to macroeconomic headwinds and competition from short-video platforms.
- Fourth quarter of 2024：
- Baidu's autonomous driving unit, Apollo Go, served approximately 1.13 million rides (calculated as a 200% year-on-year increase from Q4 2024 to Q4 2025 with 3.4 million rides in Q4 2025).
- Third quarter of 2025：
- Baidu’s online marketing revenue fell 18%.
- September 2025：
- Monthly active users of the Baidu app were 708 million.
- Fourth quarter of 2025：
- Baidu reported a 4.1% year-on-year revenue decline to 32.7 billion yuan; quarterly profit fell steeply by 42%.
- Fourth quarter of 2025：
- AI infrastructure segment generated 5.8 billion yuan, AI applications earned 2.7 billion yuan, and AI-native marketing services contributed 2.7 billion yuan in revenue.
- Fourth quarter of 2025：
- User engagement: Monthly active users of the Baidu app dropped to 679 million.
- Fourth quarter of 2025：
- Apollo Go (Baidu's autonomous driving unit) completed 3.4 million rides.
- Full year 2025：
- Baidu's total revenue declined 3% to 129.1 billion yuan, and adjusted net profit dropped 30% to 18.9 billion yuan.
- Full year 2025：
- AI Cloud revenue increased by 34% to 30 billion yuan.
- December 2025：
- Monthly active users of the Baidu app fell to 679 million.
- By February 2026：
- Apollo Go accumulated more than 20 million rides globally.
- January 2026：
- Baidu’s Kunlunxin AI chip unit filed a confidential application for a Hong Kong listing.
- Thursday, February 26, 2026：
- Baidu’s shares dropped 4.27% in Hong Kong and 3.8% in U.S. premarket trading following their earnings release.
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