Hundreds of billions in AI revenue disclosed for the first time, autonomous driving accelerates—has Baidu's revaluation moment arrived?

Baidu is attempting to prove to the market that it is no longer just a company reliant on traditional search advertising. In its latest earnings report, Baidu disclosed for the first time that its AI-related revenue reached RMB 10 billion, a 50% year-over-year growth, with third quarter results exceeding market expectations.

According to the Zhui Feng Trading Desk, Citi raised its target price by 9% to $181 in its report on the 18th, maintained its buy rating, and believes that with market expectations generally low, increased transparency in Baidu’s operating metrics and AI revenue will boost investor confidence.

Baidu’s total revenue for the third quarter was RMB 31.2 billion, down 7% year-on-year and 5% quarter-on-quarter. Although there was a decline, the results exceeded Citi’s previous forecasts. Core business revenue was RMB 24.7 billion, down 7% year-on-year, which was better than expected. Despite an 18% drop in online marketing service revenue, this was partially offset by growth in cloud revenue.

Citi expects that the positive development of cloud business and autonomous ride-hailing will drive Baidu’s valuation recovery. Analysts predict Baidu’s AI cloud revenue to grow 15% in the fourth quarter. Baidu continues to invest in upgrading its ERNIE (Wenxin Yiyan) model and AI agents, and delivers value through shareholder returns.

AI Revenue Makes Its Debut: How Solid Is It?

The biggest highlight of Baidu’s financial report this time is the first detailed disclosure of its artificial intelligence-related business revenue structure. Data shows that in the third quarter of 2025, Baidu’s total AI-related revenue reached about RMB 10 billion, marking an impressive 50% year-over-year growth.

According to Citi’s breakdown, this RMB 10 billion revenue consists mainly of three parts:

AI Cloud Infrastructure: Revenue of RMB 4.2 billion, a 33% year-on-year increase. Among this, subscription-based income from AI accelerator infrastructure grew 128% year-on-year, demonstrating robust market demand for computing power.AI Native Marketing Services: Revenue of RMB 2.8 billion, an explosive 262% year-on-year growth. This indicates that AI technology is reshaping advertising placement and conversion efficiency, injecting new vitality into traditional marketing businesses.AI Applications: Revenue of RMB 2.6 billion, up 6% year-on-year.

Traditional Advertising Under Pressure, AI Injects New Momentum

While AI business is surging ahead, Baidu’s traditional business faces challenges. The financial report shows that Baidu’s core advertising revenue was RMB 15.3 billion, down 18% year-on-year. This decline reflects the continued pressure brought by the macroeconomic environment and industry competition.

However, robust growth in non-advertising business has effectively offset the weakness in advertising. In the third quarter, Baidu’s core non-advertising revenue reached RMB 9.3 billion, up 21% year-on-year, with this part of the revenue almost entirely contributed by AI-driven cloud business and other innovative services. Amid these changes, Baidu’s revenue structure is undergoing profound transformation.

AI’s transformation of core business is also evident at the product level. According to data cited in the report, as of October 2025, about 70% of the content on Baidu mobile search result pages was generated by AI, a significant increase from about 50% at the end of June. This not only improves the user experience, but also provides fertile ground for the growth of AI-native marketing and other new business models.

Investment Banks Bullish, Citi Maintains Positive Outlook

Better-than-expected results and a clear path for AI commercialization have further improved investment banks’ outlook on Baidu. The Citi analyst team said in its report that, with market expectations generally low, Baidu’s performance was “better than expected.”

Citi believes that investor confidence in Baidu’s prospects will be boosted, mainly based on the following points: first, improvement in company operating metrics; second, the first disclosure of AI revenue; third, Baidu’s continued investment in upgrading its ERNIE model and AI agents; and fourth, value release through shareholder return plans. The report specifically emphasizes that the positive development of cloud business and autonomous ride-hailing (Robobus autonomous driving business) are key reasons for raising the target price.

Citi raised Baidu’s target price from RMB 167 to USD 181, an increase of 9%, and maintained its buy rating. Reasons for the upgrade include positive development in cloud and autonomous ride-hailing business. Analysts believe that as Baidu improves transparency in its operating metrics and AI revenue, and continues to invest in upgrades of ERNIE 5.0 and AI agents, investors will have greater confidence in its operational outlook and share price performance.

Citi expects Baidu’s core revenue in the fourth quarter to decline by 1.4% year-on-year, which is significantly better than the third quarter. AI cloud revenue is expected to grow by 15%.

~~~~~~~~~~~~~~~~~~~~~~~~

The above exciting content comes from Zhui Feng Trading Desk.

For more in-depth analysis, including real-time interpretation and frontline research, please join [Zhui Feng Trading Desk▪Annual Membership]

Risk Warning and DisclaimerThe market carries risks, and investments should be made with caution. This article does not constitute personal investment advice, nor does it take into account any user’s specific investment objectives, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions mentioned herein are suitable for their specific situation. Investing based on this information is at your own risk.