Baidu Inc. (BIDU) Stock: AI Cloud Drives Modest Q125 Growth Despite Marketing Weakness

TLDR

Q1 2025 revenue rose 3% Y/Y to CNY32.45B, beating expectations. Adjusted EPS of CNY18.54 topped analyst consensus of CNY14.74. AI Cloud revenue grew 42% Y/Y, offsetting a 6% decline in marketing revenue. Baidu reported free cash flow outflow of $1.23B due to AI investment. Apollo Go robotaxi launched internationally in Dubai and Abu Dhabi.

As of 1:43 PM EDT, Baidu Inc. (NASDAQ: BIDU) was trading at $86.34, down 3.36% on the day.

Baidu Inc. (BIDU) Stock

On May 21, the Chinese tech firm reported its financial results for the quarter ended March 31, 2025. Revenue climbed 3% year-over-year to CNY32.45 billion ($4.47 billion), beating the average analyst forecast of CNY30.90 billion ($4.30 billion).

In Q1 2025, Baidu's total revenue reached $4.47 billion. Baidu Core's revenue grew to $3.51 billion, while its net income increased 48% YoY to $1.05 billion, primarily driven by AI Cloud business, which surged 42% YoY. $BIDU

Full report: https://t.co/rBaBsj5GId pic.twitter.com/CV8cJlQxoc

— Baidu Inc. (@Baidu_Inc) May 21, 2025

 

The company posted adjusted earnings of CNY18.54 per share, down from CNY19.91 last year but well above the consensus estimate of CNY14.74. Baidu’s reported earnings per share came in even higher at CNY21.59.

AI Cloud Leads Revenue Gains

Baidu’s Core revenue rose 7% Y/Y to $3.51 billion. While online marketing revenue dropped 6% to $2.21 billion, this was balanced by a 40% surge in non-marketing revenue to $1.30 billion, largely driven by its AI Cloud division.

Chinese search engine giant Baidu reported better-than-expected first-quarter revenue, fueled by increasing demand for its AI cloud services https://t.co/GSfXxhTf9v pic.twitter.com/dUxK9uAgIj

— Reuters (@Reuters) May 21, 2025

The AI Cloud business posted 42% Y/Y growth, which Baidu’s CEO Robin Li attributed to increased market demand for full-stack AI products with competitive price-performance. Interim CFO Junjie He highlighted that AI Cloud played a vital role in supporting overall revenue during the quarter.

Investments Weigh on Margins and Cash Flow

Baidu reported SG&A expenses of $815 million, up 10% year-over-year due to higher promotional costs. R&D spending decreased 15% Y/Y to $626 million. Despite strong top-line results, adjusted EBITDA margins declined. Overall margin dropped by 400 basis points to 22%, while Core EBITDA margin slipped to 26%.

The company ended the quarter with $19.6 billion in cash and equivalents. However, free cash flow saw an outflow of $1.23 billion. Excluding IQIYI, the outflow was $1.27 billion, reflecting heightened investments in AI.

Baidu also marked a major milestone in autonomous driving with its robotaxi service, Apollo Go, launching in Dubai and Abu Dhabi. CEO Li emphasized this as a significant step in expanding Baidu’s AI-driven mobility solutions internationally.

Outlook and Analyst Sentiment

Analyst sentiment remains positive. Of the 31 analysts covering BIDU, 18 rate it a “buy” or “strong buy,” 12 suggest “hold,” and only one has a “sell” recommendation. The median 12-month price target stands at $107.85.

Over the last quarter, BIDU shares have fallen 2.9% but remain up 6% year-to-date. With no negative earnings revisions in the past month and forecast upgrades rising 2.6% over the last three months, confidence in Baidu’s long-term AI strategy remains steady.

 

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