Michael Burry, the investor famed for “The Big Short,” aimed at Baidu Inc. (NASDAQ:BIDU) following its third-quarter 2025 earnings release, highlighting a pattern of accounting maneuvers that raises doubts about the company’s financial health.

Check out BIDU’s stock price here.

Baidu’s 2024 Accounting Changes Lead To Q3 Impairment?

While Baidu management touted an “AI-native” transformation this week, Burry flagged that the company's profit growth in the previous year was driven by administrative estimates rather than operational success.

Burry's critique centers on the contradiction between that 2024 “life extension” and the reality revealed in the current third-quarter 2025 report.

Benzinga has reached out to Baidu for a comment.

On Tuesday, Baidu announced a massive RMB 16.2 billion ($2.2 billion) impairment charge, effectively admitting that much of its existing infrastructure is now obsolete—less than a year after claiming those same assets would last longer.

“Took a RMB 16.2 billion impairment on RMB 30.1B net PPE (over 50%),” Burry noted, emphasizing the disconnect. He pointed out the irony of Baidu extending the useful life of servers in 2021 and 2024 to smooth earnings, only to write off half the value of its property, plant, and equipment in 2025.

In 2024, Baidu's net income rose over 50% largely due to a decision to extend the estimated “useful life” of its servers from five to six years. Burry highlights, this accounting tweak artificially lowered depreciation expenses and boosted the bottom line, creating the illusion of growth.

See Also: Baidu’s AI Cloud Takes Off, But Ad Slump Steals Spotlight

Management Says Q3 Impairment Is For New AI Infrastructure

During the third-quarter earnings call, Baidu management defended the massive write-down as a necessary step for their AI pivot.

“We are accelerating investments in the latest AI computing technologies without any hesitation,” said Baidu CFO Haijian He.

“Some of the existing assets no longer meet today’s computing efficiency requirements. So we actually proactively did some impairments.”

However, the core business numbers for the third quarter struggled to back up the bullish narrative. Total revenue dipped 7% year-over-year to $4.38 billion, and free cash flow turned negative as AI spending ramped up.

While CEO Robin Li insisted that “AI is driving transformative value,” Burry's analysis suggests that Baidu’s earnings history is colored by shifting accounting goalposts, leaving investors to question the true useful life of the company's assets.

Baidu Outperforms Nasdaq In 2025

Shares of BIDU have risen 41.64% year-to-date, whereas the Nasdaq Composite and Nasdaq 100 indices have returned 16.35% and 16.82%, respectively.

On Tuesday, the shares closed 2.66% higher at $117.14 apiece and dropped by 2.64% overnight. The stock has gained 36.18% over the year.

BIDU maintains a weaker price trend over the short term but a strong trend in the medium and long terms, with a strong value ranking. Additional performance details, as per Benzinga’s Edge Stock Rankings, are available here.

The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading lower on Wednesday, after closing lower for the second consecutive day on Tuesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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