Baidu (BIDU) is set to implement major layoffs as the company moves to streamline its operations following a loss-making Q3. Market sources report that the layoffs began this week, affecting multiple business units across the tech giant.
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Layoffs Follow Weak Ad Revenues
Baidu’s decision follows its third-quarter earnings report on November 18, which highlighted ongoing challenges in its core advertising business. The company posted a second consecutive quarter of declining revenue, with total revenue falling 7% and online advertising revenue plunging 18% year-over-year.
Moreover, the quarter ended with a loss of ¥11.23 billion, emphasizing the growing headwinds.
More Details About the Layoffs
The layoffs are expected to continue through the end of the year, marking one of Baidu’s most extensive restructuring efforts in recent times. While the total number of employees affected remains unclear, sources described the downsizing as significant internally.
In some business units, workforce reductions could reach as high as 40%, depending on performance, strategic importance, and resource allocation. Additionally, sources indicate that Baidu’s mobile ecosystem group will be the hardest hit by layoffs, reflecting weaker monetization in mobile search.
Is AI Growth Enough?
Despite the broad cuts, positions related to AI and cloud services are largely being protected, according to four sources. Notably, the company’s AI Cloud revenue grew 21% year-over-year, and AI-native marketing services increased 262% in Q3. Looking ahead, Baidu says it will keep high investment in AI despite growing competition, seeing it as a key growth driver.
Broadly, Baidu’s layoffs show an industry in change, where profit pressures are pushing companies to scale back older businesses and focus on AI as the next growth engine. It’s unclear if Baidu’s AI efforts will regain momentum, but the size and speed of the layoffs signal that big changes are coming.
Is Baidu Stock a Buy Now?
According to TipRanks, Wall Street has a Moderate Buy consensus rating on BIDU stock, based on 14 Buys, four Holds, and one Sell assigned in the last three months. The average stock price target for Baidu is $147.93, which implies 27.15% upside potential.
Year-to-date, BIDU stock has gained 38%.
