Legacy business still pressured—can Baidu pull off an AI turnaround?
$Baidu(BIDU)$'s Q2 Earnings Release: Revenue Declines 4% YoY to RMB 31.3 Billion, EPS Misses Estimates
Baidu released its second-quarter earnings, reporting revenue of RMB 31.3 billion, down 4% year-over-year, which was in line with market expectations. However, adjusted earnings per share (EPS) came in at RMB 7.22, missing market consensus by 26%. Baidu now divides its business into two segments: AI business and traditional business.
Within the traditional business segment, the advertising business based on search and information feeds continued to decline sharply, falling 23% year-over-year, remaining on a downward trajectory with no clear signs of a turning point. In terms of autonomous driving and smart hardware, Apollo Go (Robotaxi) is accelerating its overseas expansion. It has begun fully driverless commercial operations in Dubai, obtained its first batch of unmanned testing permits in Hong Kong, and is also exploring commercial opportunities in the UK, Kazakhstan, and other countries. However, revenue still declined compared to the same period last year, and the traditional business continues to face pressure.
On the AI business front, the GPU cloud business—which purely sells computing power—has grown very rapidly, with year-over-year growth reaching 283%. However, this is largely driven by the recent tight supply of computing power in the market, which has made the "landlord-style" business model more lucrative than usual. In my view, the real transformational businesses—AI applications such as Baidu Wenku (Baidu Library), Baidu Wangpan (Baidu Cloud), and general-purpose intelligent agents—are still in their early stages. Compared to competitors like Tencent, ByteDance, and Alibaba, Baidu lacks a unique traffic-acquisition channel to drive commercialization, making its future business prospects still quite challenging.
Therefore, Baidu's true AI transformation remains extremely difficult. For now, it can still rely on the premium pricing of computing power to keep its top-line revenue relatively attractive and maintain a glossy exterior. But once the computing power shortage ends, what business will Baidu rely on to sustain its revenue and profits? $BIDU-SW(09888)$
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- Investing Leon·08-19 19:27Baidu’s AI business has already fallen behind. Continuing to discuss Baidu as a major AI player at this point clearly overlooks how China’s AI industry landscape has evolved.LikeReport
- DrewStrong·08-19 15:33Baidu can still pull off an AI turnaround. API call growth above 200% QoQ is exactly why the market is underpricing Baidu's commercialization curveLikeReport