By Tracy Qu

Baidu reported sharply lower profit, with revenue declining for a third straight quarter, as the Chinese search giant continued to struggle to transform its businesses in the AI era.

Once considered one of China's important technology titans alongside Alibaba and Tencent, Baidu has been facing pressure on both its top and bottom lines as its main advertising business slows. Seeking new avenues of growth, the internet company has been investing heavily in fields such as artificial intelligence, self-driving technology and chip development.

Baidu restructured its earnings report for the final quarter of 2025, underscoring its focus to become an AI-driven company.

The Beijing-based company on Thursday said fourth-quarter net profit dropped 66% from a year earlier to 1.78 billion yuan, equivalent to $259.1 million. Analysts had estimated 2.56 billion yuan, according to a FactSet consensus.

Revenue continued to decline, as expected, falling 4.0% to 32.74 billion yuan in the three months ended December. Compared with the third quarter, revenue increased 5.0%.

For the full year, revenue slipped 3%, while net profit slumped 76% to 5.59 billion yuan.

Baidu highlighted some progress in its results, including 48% revenue growth in its AI-powered business, which accounted for 43% of general business revenue in the fourth quarter, up from 39% in the third quarter. Revenue from its AI cloud infrastructure segment rose 34% to 5.8 billion yuan, it said.

"2025 marked a pivotal year as AI became the new core of Baidu," Chief Executive Robin Li said. "Our portfolio of AI applications continued to scale, addressing diverse needs across enterprises and individuals."

The company said Apollo Go, its autonomous ride-hailing service, completed 3.4 million driverless operational rides in the fourth quarter, with total rides increasing by more than 200% year over year.

Meanwhile, the company's AI assistant, Ernie, integrated into its flagship Baidu search-engine app and on personal computers, reached 202 million monthly active users in December, crossing the 200 million MAU milestone.

Still, Baidu's Hong Kong-listed shares have lost steam this year, declining by more than 6% after a nearly 60% jump in 2025. The company earlier this month announced plans for its first-ever dividend and authorized a new $5 billion share-buyback program to boost shareholder returns.

Analysts said ahead of the results that the proposed spinoff of Baidu's AI chip unit, Kunlunxin, one of the company's most valuable assets, could be the next catalyst for the stock. Given the performance of recently listed Chinese chip designers, Kunlunxin's IPO could be well-received by investors, Nomura analysts said in a recent note.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

February 26, 2026 06:45 ET (11:45 GMT)

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