Baidu Stocks Plummet 7.5% as Q4 AI Cloud Boom Fails to Offset Advertising Fall

TMTPOST -- The American depositary receipts (ADRs) of Baidu, Inc. plummeted 7.5% on Tuesday, underperforming the U.S. stock market as the benchmark S&P 500 index finished 0.24% higher to its new record high. Shares of Chinese search engine behemoth were hampered as financial reports showed the artificial intelligence-buoyed cloud business failed to offset the fall in advertising revenue last quarter.

Credit：Medium

Baidu posted mixed results for the quarter ended December 31, 2024. Revenue for the quarter fell 2% year-over-year (YoY) to RMB34.12 billion (US$4.68 billion), beating Wall Street anticipated RMB33.39 billion. On non-GAAP basis, adjusted earnings per American depositary share (ADS) was RMB19.18 with a 12% YoY decrease, still better than analysts estimated RMB14.37 per share. Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, crashed 23% YoY to RMB6.95 billion, whereas analyst projected the company would record EBITDA of RMB7.47 billion.

Baidu’s revenue fell YoY for three quarters in a row, though the decline for the December quarter decelerated. The July-to September period saw a decrease of 3%, the biggest yearly drop in more than two years. Baidu’s failure to reverse the downward trend resulted from the further slowdown of its major business digital advertising.

Baidu Core, which marks up more than 81% of overall revenue for the fourth quarter, brought RMB27.7 billion. Revenue from the segment edged up 1% YoY after a stagnate quarter ended September. Net income of the segment dropped 10% YoY to RMB6.74 billion following a 17% YoY increase three month ago. Adjusted EBITDA of RMB6.52 billion fell 20%, steeper than a 18% YoY decrease.

Online marketing, a major part of Baidu Core, generated RMB17.9 billion for the December quarter, representing a 7% YoY decline, versus a 4% drop during the previous quarter. Non-online marketing revenue rose 18% YoY to RMB9.8 billion, mainly driven by AI Cloud business. That division accelerated from a 12% YoY gain three months earlier.

“2024 marked a pivotal year in our ongoing transformation from an internet-centric to an AI-first business. AI Cloud gained momentum, fueled by broad market recognition of our full stack AI capabilities. In Mobile Ecosystem, we have been steadfast in advancing the AI transformation, making search more AI-native to deliver a better user experience, “ said Baidu CEO Robin Li in a statement.

Li highlighted momentum of AI Cloud. Revenue from AI Cloud reached RMB 7.1 billion for the fourth quarter, delivering a strong year-over-year increase of 26% compared with a 11% YoY increase three months earlier, and the business expanded non-GAAP operating margins. The business contributed a full-year revenue growth of 17%. Generative AI-related revenue for 2024 nearly tripled from the previous year, noted Dou Shen, Executive Vice President and head of AI Cloud. The stellar growth was fueled by rising demand for Baidu’s large language model (LLM) Ernie and its AI infrastructure and scoring the market's strong recognition of our technological leadership, Dou said.

According to Baidu, Ernie handled approximately 1.65 billion API calls daily in December 2024, with external API calls increasing by 178% quarter over quarter, highlighting particularly strong momentum. The MAU of Baidu Wenku's AI-enabled features reached 94 million in December 2024, with a 216% year over year and an 83% quarter over quarter increase.

Apollo Go, Baidu's autonomous ride-hailing service, maintained double-digit growth for the fourth quarter. It provided over 1.1 million rides, up 36% YoY, after a 20% increase for the previous quarter.Apollo Go was granted permits to conduct autonomous driving testing on public roads in Hong Kong in November, making Apollo Go the first and only of its kind to receive robotaxi testing authorization in the region. Accumulated rides provided to the public by Apollo Go surpassed 9 million in January 2025, and the service has commenced 100% fully driverless operations across China since this month. Apollo Go validated its business model, paving the way for global expansion and scalable, asset-light strategies, Li commented.