Abstract

Baidu, Inc. (BIDU-SW) will release its fourth-quarter fiscal 2025 results on February 26, 2026 post-Market, with the market focused on stabilizing core advertising, navigating AI monetization, and margin resilience into early 2026.

Market Forecast

Consensus tracking and the company’s latest guidance signal fourth-quarter revenue of RMB 32.65 billion, with forecast year-over-year change of 2.12%, EBIT around RMB 2.33 billion with a forecast year-over-year decline of 53.27%, and EPS estimated at RMB 1.17 with a forecast year-over-year decline of 43.09%. The market anticipates mixed margin dynamics, with gross profit margin supported by platform efficiencies and a net profit profile still normalizing given investment cadence in AI and traffic acquisition. Baidu Core remains the near-term revenue anchor and strategic cash generator, and iQIYI continues to contribute engagement while working through pricing and content cost discipline. The most promising segment is Baidu Core, projected at RMB 24.66 billion last quarter and positioned for revenue stabilization in Q4 FY25 on search, feed, and AI-assisted advertising, supported by modest mid-single-digit year-over-year trends.

Last Quarter Review

Baidu’s previous quarter delivered revenue of RMB 31.17 billion, gross profit margin of 41.25%, GAAP net profit attributable to the parent company of RMB -11.23 billion, net profit margin of -36.03%, and adjusted EPS of RMB 1.39 with year-over-year decline of 34.12%. The quarter-on-quarter change in GAAP net profit attributable to the parent company was -253.40%, reflecting one-off items and heavier AI-related spending alongside content and traffic costs. Main business performance saw Baidu Core revenue at RMB 24.66 billion and iQIYI at RMB 6.68 billion, with consolidated eliminations and adjustments of RMB -0.17 billion; Baidu Core remained the primary earnings driver and iQIYI sustained subscriber monetization amid content slate optimization.

Current Quarter Outlook

Baidu Core (Search, Feed, AI Ads)

Baidu Core should anchor Q4 FY25 revenue and operating cash flow, benefiting from gradual recovery in China advertising demand into late FY25 and early FY26. Advertisers in key verticals such as healthcare, local services, and e-commerce have shown tentative budget normalization, which supports click volumes and ad yields. The rollout of generative AI features in search and feed is expected to enhance user engagement and ad relevance; however, AI inference costs and traffic acquisition agreements can pressure operating margins until monetization density improves. Management’s focus on conversion-led ad products, SMB activation, and enterprise tools around Baidu Wenxin (Ernie) is likely to sustain mid-single-digit growth trajectories, though near-term variability may persist if macro sentiment softens.

AI Cloud and Enterprise AI Solutions

AI Cloud sits at the intersection of Baidu’s model capabilities and industry digital transformation, and remains the most promising medium-term engine if monetization scales beyond project-based revenue into recurring platforms. Deal momentum in public sector, manufacturing, and financial services is tied to adoption of Ernie-based assistants, content generation, and workflow automation. The revenue mix is shifting toward solution-led packages that can improve gross margin over time versus low-margin infrastructure-only contracts. Key sensitivities include unit economics for GPU hosting and inference, the pace of regulatory approvals for AI applications, and competitive intensity from domestic peers. If Baidu can convert pilots to standardized products with utilization discipline, the segment’s contribution could expand meaningfully in the next several quarters.

iQIYI

iQIYI continues to balance subscription ARPU optimization with content lineup quality and ad recovery in brand display. The business remains revenue-accretive but sensitive to content amortization and promotional cadence. New title performance and live-action series can provide episodic boosts, yet margin outcomes depend on pricing power and advertiser confidence in seasonal windows. iQIYI’s cost discipline and improved content ROI metrics will be watched closely; stabilization of ad loads and a rational release calendar are essential to maintaining EBITDA margin while protecting engagement.

Stock Price Drivers This Quarter

Near-term stock performance will hinge on evidence of revenue stabilization in Baidu Core and visibility into AI monetization economics. Investors will scrutinize P&L signals on gross margin durability amid AI inference costs, and the direction of net margin normalization following the prior quarter’s loss. Guidance for Q1 FY26 and commentary on enterprise AI order pipelines, GPU capacity, and pricing will influence sentiment; any acceleration in standardized AI SaaS revenues could be a positive surprise. Conversely, outsized spending or weaker-than-expected ad budgets would weigh on estimates and keep valuation multiple compression in play.

Analyst Opinions

The majority of recent institutional commentary leans constructive, emphasizing revenue stabilization and the optionality of AI-enabled products despite near-term earnings volatility. Several well-followed sell-side voices have highlighted that Baidu’s Q4 forecast implies modest top-line growth and manageable cash investment intensity, with investors likely to tolerate EPS pressure if AI adoption KPIs show progress. Analysts point to improving advertiser behavior into calendar early 2026 and the potential for Baidu’s enterprise AI solutions to lift blended margins as the mix shifts to software-like contracts. The bullish camp argues that the prior quarter’s net loss was unusually affected by non-recurring and strategic expense ramp, setting a base for better sequential outcomes if Q4 revenue lands near RMB 32.65 billion and operating efficiency improves. The constructive view is supported by institutions noting that normalized ad conversion metrics and AI product traction could anchor valuation, while disciplined capex and targeted GPU procurement mitigate margin risk. Overall, bullish commentary outweighs cautious takes at present, with expectations centered on modest revenue growth, sequential operational improvement, and clearer AI monetization signals in management’s outlook for the next quarter.