Baidu's Q2 2025 revenue fell 4% year-over-year to 32.71 billion yuan, slightly below analyst expectations. Online marketing revenue declined 15%, and that segment typically accounts for about 60% of total revenue, amplifying the impact. Reduced ad spending reflects a slowing Chinese economy, weak hiring, and a sluggish property market, prompting companies to cut ad budgets. Baidu's AI cloud revenue rose 34%, partially offsetting advertising losses and emerging as a strategic growth area. Leadership emphasized a shift toward AI improvements and product innovation, with rollouts including Ernie updates, smarter mobile search with natural language and multi-dialect voice, and AI-driven video generation. Competition from DeepSeek and short-video platforms intensifies market pressure.
Most of Baidu's revenue drop came from its online marketing segment, which fell 15%. That part of the business usually makes up about 60% of total revenue, so the hit was significant. The decline reflects Chinese companies pulling back on ad spending, driven by a slowing economy, weak hiring, and a sluggish property market. Many businesses are cutting costs wherever they can, and ad budgets are an easy target, which has directly hit Baidu's search advertising income.
On the bright side, Baidu's AI cloud business kept growing, with revenue up 34%, helping to offset some of the losses from advertising. The cloud division is quickly becoming a key part of Baidu's business as the company shifts its focus toward AI and cloud computing, moves aimed at building long-term growth beyond its traditional advertising revenue. CEO Robin Li highlighted Baidu's shift in strategy, saying the company is leaning on ongoing AI improvements
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