While the biggest companies in the world are investing huge amounts of money in AI, Baidu’s latest results show the risks that come with this strategy.
Baidu, the Chinese search engine company, reported weak second-quarter results on Tuesday. This added more pressure to a stock that has already dropped a lot this year. Net income dropped 68% from last year to 2.3 billion yuan, or about $344 million. Revenue also fell 4% to 31.3 billion yuan. Both numbers were below what analysts expected. According to a FactSet poll, analysts had predicted net income of 2.8 billion yuan and revenue of 31.7 billion yuan.
Baidu’s American depositary receipts dropped sharply before the market opened, doing worse than the overall market futures.
Baidu’s main search business has come under more pressure lately because more people are using large language models instead of regular search engines. This has hurt its advertising and marketing revenue. To respond, Baidu has invested a lot in AI, which brought in 12.5 billion yuan in revenue this quarter. Still, investors are not sure if Baidu can compete with big rivals like Alibaba and fast-growing startups such as DeepSeek in the crowded AI market.
Over the past year, Baidu’s American depositary receipts have dropped a lot. Since February 2021, the company has lost about $70 billion in market value. As of Monday’s close, Baidu’s valuation was just over $35 billion.
