Baidu Q2 Earnings Call Highlights
Key Points
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- AI drove a growing share of Baidu’s business: AI-powered operations represented half of general-business revenue, with AI Cloud Infrastructure revenue up 50% year over year and GPU cloud revenue up 283%. Total revenue nevertheless fell 4% year over year to RMB 31.3 billion, while management continued to emphasize disciplined investment and potential margin expansion.
- Advertising remains under pressure during the AI search transition: Baidu is prioritizing AI search quality and user experience over near-term monetization, and expects online marketing revenue to remain pressured in the second half as users shift toward AI chatbots and new formats.
- Apollo Go expanded its autonomous-driving footprint: The unit completed about 1 million fully driverless rides in Q2 and began or planned testing and commercial operations across markets including Hong Kong, London, Dubai, Switzerland and Kazakhstan.
Baidu (NASDAQ:BIDU) said its AI-powered businesses accounted for half of its general business revenue in the second quarter of 2026, as the company reported rapid growth in AI cloud infrastructure and outlined continued investment in chips, models, applications and autonomous driving.
Total revenue was RMB 31.3 billion, down 2% from the prior quarter and 4% from a year earlier. Baidu’s general business generated RMB 25.2 billion in revenue, down 3% sequentially and 4% year over year, while iQIYI revenue was RMB 6.3 billion, up 1% sequentially but down 5% year over year.
Net income attributable to Baidu was RMB 2.3 billion, or RMB 5.74 per diluted ADS. Non-GAAP net income was RMB 2.6 billion, or RMB 7.22 per diluted ADS. The company reported operating income of RMB 3 billion and a 10% operating margin; non-GAAP operating income was RMB 3.8 billion, for a 12% margin.
AI Cloud Growth and Margin Outlook
CEO Robin Li said Baidu Core AI-powered business revenue reached RMB 12.5 billion, representing half of Baidu’s general business revenue. AI Cloud Infrastructure revenue rose 50% year over year, while GPU cloud revenue grew 283%, accelerating from 184% growth in the first quarter.
Li attributed cloud growth to demand for training and inference computing, increased spending by existing clients and expansion across sectors including internet services, autonomous driving, smartphones, financial services and embodied AI. Revenue from embodied AI customers grew about sixfold year over year, he said.
Dou Shen, executive vice president of Baidu AI Cloud Group, said GPU cloud has a more attractive margin profile than traditional CPU cloud and is becoming a larger part of cloud revenue. He also said Qianfan, Baidu’s model-as-a-service platform, recorded more than ninefold year-over-year growth in revenue from external customer token usage.
Management said it expects AI Cloud Infrastructure growth to remain strong in the second half, with potential for further acceleration. Shen said margin expansion could be supported by a growing GPU cloud mix, better resource utilization, operating efficiency, model-serving revenue and cost advantages from Baidu’s full-stack AI capabilities and self-developed chips.
CFO Henry Haijian He said Baidu remains in an AI investment cycle but intends to invest with discipline and focus on return on invested capital, operating efficiency and cash flow. The company had RMB 283.1 billion in total cash and investments as of June 30 and generated RMB 3.4 billion in operating cash flow during the quarter.
Kunlun Chips, Models and AI Applications
Li said demand for Baidu’s Kunlun AI chips remained robust and broadened across industries. The company continued expanding compatibility with Chinese foundation models and frameworks, including Kimi K3, GLM 5.2, MiniMax M3 and Hunyuan 3. Baidu is advancing its M100 chip for large-scale inference and its upcoming M300 chip.
Shen said the proposed listing process for Kunlunxin remains ongoing, with the company planning to update the market when it has more information. He said growing demand for AI computing and constrained domestic supply create an opportunity for high-performance, reliable and cost-efficient domestic AI chips.
On foundation models, Li said Baidu has reorganized its model teams and added AI talent as it seeks to improve ERNIE’s competitiveness. He said the company will prioritize model capabilities that support Baidu applications, including AI search, digital humans, Miaoda, Famou Agent and DuMate.
Baidu said its Miaoda coding platform’s monthly active users in June were 67% higher than in March after the launch of Miaoda 3.0. The company also said AI daily active user penetration across Baidu Wenku and Baidu Drive rose 27.4% year over year in June. ERNIE Assistant daily active users increased 83% year over year, while average daily conversation rounds more than tripled.
Advertising Pressure During AI Search Transition
Julius Rong Luo, executive vice president of Baidu’s Mobile Ecosystem Group, said the company has focused its AI search effort on improving answer quality, reliability, structure and presentation. Baidu has also integrated AI search more closely with ERNIE Assistant to support interactive, multi-round conversations and more complex tasks.
However, Luo said online marketing revenue remained under pressure in the second quarter amid intense competition for user attention from AI chatbots and other new product formats. Baidu has also deliberately held back monetization of AI search while it prioritizes product development and user experience.
“Given these dynamics are likely to persist, we expect our advertising business to remain under pressure in the second half,” Luo said. He added that Baidu expects monetization opportunities that fit naturally into AI experiences to emerge as models and product capabilities improve.
Apollo Go Expands Internationally
Apollo Go completed about 1 million fully driverless operational rides in the second quarter, bringing cumulative public rides to more than 23 million as of June. Ride volume was temporarily affected by operational adjustments in some Chinese cities related to regulatory considerations, though Li said operations in affected cities had begun resuming as of August.
The company received Hong Kong’s first permits for fully driverless testing in June and began testing on Airport Island in July. Baidu said Apollo Go became the first robotaxi provider globally to conduct fully driverless testing in a right-hand-drive, left-hand-traffic market.
In July, Apollo Go began open-road testing in London with Uber and Lyft and launched fully driverless commercial operations in Dubai. It also began open-road testing in Switzerland with PostBus and signed a memorandum of understanding with Kazakhstan’s Turlov Private Holding Ltd.
Li said Apollo Go’s fully driverless vehicles had recorded an average of approximately one airbag deployment per 14.4 million kilometers as of the end of June. The company aims to expand fleets and ride volumes, improve safety and operations, advance internationally and bring more cities to unit-economics breakeven.
Separately, Baidu said its board approved a plan in July to convert its Hong Kong listing to dual primary status. The company has submitted an application and plans to hold an extraordinary general meeting on Aug. 26. It expects the conversion to take effect this year, subject to shareholder and Hong Kong Stock Exchange approvals.
About Baidu (NASDAQ:BIDU)
Baidu, Inc, founded in 2000 and headquartered in Beijing, is a Chinese multinational technology company best known for operating one of China's leading internet search engines. The company built its business around online search and related advertising services, providing search, content aggregation and targeted ad placements to consumers and marketers across China. Baidu went public on the NASDAQ in 2005 and has since diversified beyond search into a broader technology and AI-focused portfolio.
Core products and services include the Baidu search platform and mobile app, Baidu Maps and Baidu Baike (an online encyclopedia), along with digital content initiatives.
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