Baidu reported weak Q3 2025 results. Revenue for the quarter came in at RMB 31.17 billion ($4.4 billion), down 7%, as ad sales fell 18%. Cloud revenues grew 21%, but the company booked an RMB 11 billion loss due to asset write-downs. Weak Chinese demand is hurting advertising, while rising competition in AI is forcing Baidu to spend more on cloud, chips, and its Ernie models.
While Baidu has been spending heavily on AI-related research, the company is looking to double down on deploying the technology to consumers. The company is launching a rival to OpenAI's ChatGPT chatbot called Earnie bot, which is expected to integrate across all the company's offerings, beginning with search.
Below are key drivers of Baidu's value that present opportunities for upside or downside to the current Trefis price estimate for Baidu:
For additional details, select a driver above or select a division from the interactive Trefis split for Baidu at the top of the page.
Touted as the Google of China, Baidu is the number one Chinese language search provider and the most visited website in China. Baidu's main search operation provides search for websites, audio files, and images.
Baidu offers a unique Chinese language search platform to both users and customers. This platform consists of its websites and the Baidu Union — a network of third-party websites and software applications. By generating traffic from its users, Baidu can attract business customers who wish to advertise their products and services alongside Baidu's search results and on Baidu's web properties.
Baidu makes the majority of its money from its search operations. Baidu's search advertising business is driven by two important factors that contribute to its significance:
Baidu dominates the search advertising market in China, with an estimated market share of over 80% (by revenue).
Though Qihoo 360 and Sogou have emerged as credible players in the desktop online search market, Baidu has gained dominance over the country's mobile search market. Baidu also competes with Bing and Google China in the domestic search market.
Demand from online advertisers for keyword advertising on Baidu sites could continue to cause upward pressure on Baidu's Revenue per Search.
There are also concerns about the impact of AI on Baidu’s search operations. While Baidu has been investing considerably in AI with tools such as its Ernie chatbot, it may have to figure out competent monetization strategies since the technology deployed at the moment has less scope for advertisements. Moreover, AI-powered chatbots could disrupt traditional search as users seek direct answers rather than clicking through search results and ads. The competition in search could also become more intense, as Chinese tech players such as Alibaba and Tencent are developing competing large language models, which could challenge Baidu’s position in the search market.
The Chinese online video market has exploded in recent years, driven by the increasing penetration of smartphone users and high-speed internet in the region. This is expected to continue to drive iQiyi online video streaming revenues in the coming years.
