On August 18, Baidu declined 8.94% in regular trading, trading at $96.96/share, with turnover of $226 million. The sharp selloff was triggered by the company's Q2 earnings release, which missed analyst expectations on both revenue and profit metrics.

Baidu reported Q2 total revenue of 31.33 billion RMB, down 4% year-over-year, below the consensus estimate of approximately 31.78 billion RMB. Adjusted EPS came in at 7.22 RMB per ADS, significantly missing the FactSet estimate of 9.35 RMB — a shortfall of approximately 23%. In dollar terms, adjusted EPS of $1.06 missed the $1.35 consensus by 21.48%. Net profit attributable to Baidu fell 68% year-over-year to 2.319 billion RMB, reflecting heavy AI investment pressure on margins. Free cash flow turned negative at -7.95 billion RMB.

While AI-related business showed strength — AI cloud infrastructure revenue grew 50% YoY to 7.3 billion RMB, with GPU cloud surging 283% — these gains were insufficient to offset the decline in traditional advertising revenue. The earnings miss was further compounded by a Fitch credit downgrade to A- from A announced days earlier, adding to negative sentiment.

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