Baidu Stock Slumps as AI Bet Faces Growing Pains

Baidu ( (BIDU) ) has fallen by -7.20%. Read on to learn why.

Baidu shares slipped -7.20% over the past week as investors weighed a powerful long‑term AI story against near‑term growth and cost concerns. The company’s latest results showed that total revenue edged down 2% quarter on quarter to RMB 32.1 billion, revealing pressure in legacy operations like video platform iQIYI, which saw an 8% revenue drop. That overall top-line softness, combined with higher cost of revenues from its fast‑growing AI Cloud business, has raised questions about how quickly Baidu can translate its AI leadership into sustained earnings growth.

Under the surface, however, Baidu is transforming into an AI‑centric company at remarkable speed. AI‑powered revenue jumped 49% year over year to RMB 13.6 billion and now makes up 52% of its general business, with AI Cloud infrastructure revenue up 79% and GPU Cloud soaring 184%. The firm is pushing aggressively across the AI stack: the ERNIE 5.1 foundation model is topping Chinese benchmarks, Kunlunxin chips are deployed at large scale with major hardware partners, and AI‑driven products such as the Tianfan MoS platform, digital humans, and Miaoda are seeing rapid user and revenue growth. Robotaxi service Apollo Go has already delivered 3.2 million fully driverless rides in a single quarter and is preparing international trials.

Despite the recent share-price pullback, Wall Street remains broadly constructive on Baidu. J.P. Morgan, Citi, Jefferies, DBS and others maintain Buy ratings with price targets far above current levels, while the overall analyst consensus sits at Moderate Buy with an average target implying solid upside. Supportive factors include improving non‑GAAP profitability, positive operating cash flow, and a large cash and investment pile of RMB 279.3 billion that can fund data centers, chips and robotaxis without jeopardizing financial stability. For now, the stock’s -7.20% weekly drop reflects investor unease about legacy revenue headwinds and rising AI costs, but many analysts see that weakness as a potential entry point into Baidu’s longer‑term AI growth story.