Baidu reported second-quarter revenue of 32.71 billion yuan, down 4% year-over-year, while adjusted profit per ADS was 13.58 yuan, beating estimates. Core online advertising revenue, typically about 60% of company revenue, fell 15% to 16.2 billion yuan as advertisers cut spending amid a property downturn, weak employment and choppy consumer demand. The AI cloud segment grew 34%, driving gains in non-online-advertising revenue. Baidu has increased investments in artificial intelligence, launched a redesigned search interface, introduced MuseSteamer for AI video generation, and open-sourced a version of its Ernie model while competing with rivals such as DeepSeek. U.S.-listed shares rose in premarket trading.
Hit by a property market downturn, weak employment rates and choppy consumer demand, companies in China, the world's second-largest economy, have reined in advertising spending to cut costs and protect their margins. The squeeze has spilled over into Baidu, which relies heavily on advertising in its search engine. Its core online advertising business, which typically makes up 60% of overall company revenue, saw revenue decrease 15% to 16.2 billion yuan during the April-June quarter.
That eclipsed upbeat growth at the Beijing-based company's AI cloud segment, which drove a 34% increase in Baidu's non-online advertising business. Baidu has invested heavily in artificial intelligence in recent years. Last month, it launched a redesigned search interface that it called the biggest overhaul in a decade. It has also expanded AI services, recently launching MuseSteamer, an AI-powered video generator for businesses. It has also open-sourced a version of its flagship Ernie model as it competes with rivals including DeepSeek,
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