Baidu’s Swift $11-B Selloff Shows Struggle to Meet AI Hype

A 20% slide in Baidu Inc.’s shares over the past month serves as a crucial reminder for companies in China’s rapidly intensifying artificial intelligence race: Investors are demanding tangible results, Charlotte Yang reported for Bloomberg News.

Despite strength in the cloud business, analysts predict both Baidu's revenue and profit will fall year on year. (Photo: Baidu Facebook)

The search engine specialist kicks off December-quarter earnings for China’s Big Tech on Thursday amid growing concern that its AI investments are not translating into a meaningful growth driver quickly enough.

Despite strength in the cloud business, analysts predict both revenue and profit will fall year on year, hurt by continued weakness in the core advertising business, which is closely tied to the broader economy.

With markets fixated on AI, positive management commentary or evidence that capital spending is bearing fruit will be crucial to help stem an equity rout that has eroded $11 billion in market value since the stock hit a three-year high on Jan. 23.

“In the crowded field of Chinese AI players, Baidu is viewed more as an optionality- or valuation-driven sum-of-the-parts story rather than a clearly defined long-term winner,” said Gary Tan, portfolio manager at Allspring Global Investments LLC.

“Baidu must demonstrate that it is leveraging its AI capabilities to build a true full-stack AI platform rather than acting as a jack of all trades.”

Baidu was among the first Chinese companies to embrace AI and roll out a ChatGPT-like service, but it has lost leadership in the field to larger rivals as well as newcomers like DeepSeek.

The Beijing-based firm’s flagship mobile application has also seen its popularity wane, with young users flocking to social apps from rivals ByteDance and Xiaohongshu for search queries.