Key Takeaways: The seemingly alarming 11.2 billion yuan loss does not signify a business collapse; rather, it represents a financial “detox.” Despite an 18% year-on-year decline in its core advertising business, Baidu has lightened its load through significant asset impairments. Meanwhile, its AI cloud and autonomous driving businesses are emerging as robust second-growth engines.

On November 18, 2025, Baidu unveiled its Q3 2025 financial results. The data revealed total revenues of 31.2 billion yuan for the quarter, marking a 7% year-on-year decrease, and a net loss attributable to Baidu of 11.2 billion yuan, compared to a net profit of 7.6 billion yuan in the same period last year.

For an internet behemoth to report a loss exceeding 10 billion yuan in a single quarter is undeniably startling. However, a closer examination of the financial results reveals that this is not a “black swan” event for Baidu's fundamentals but rather the pain associated with financial restructuring and business transitioning into the AI era.

1. The Truth Behind the Massive Loss: A 16.2 Billion Yuan “Accounting Game”

The first step is to elucidate how the 11.2 billion yuan loss occurred.

The financial results indicate an operating loss of 15.1 billion yuan for the quarter. However, the primary cause of this loss was not unchecked operating expenses but rather a long-term asset impairment charge of 16.2 billion yuan (approximately 2.27 billion USD).

This impairment primarily stemmed from losses on the “core asset group,” likely encompassing a substantial amount of outdated infrastructure hardware (servers, chips) and related supporting assets that are no longer aligned with the demands of the AI era. Under accounting standards, this is a one-time, non-cash expense. If we exclude this impairment and non-operating factors such as stock-based compensation and consider the Non-GAAP data:

Operating Profit: 2.2 billion yuan, remaining positively profitable.

Net Profit Attributable to Baidu: 3.8 billion yuan, a 36% year-on-year decrease but still a healthy profit.

Additionally, Baidu possesses 296.4 billion yuan (approximately 41.64 billion USD) in cash and investments on its books. This signifies that Baidu's cash flow remains abundant, and the massive loss has not jeopardized the company's survival. The substantial impairment appears more akin to a proactive “balance sheet cleanup” by management to pave the way for a future asset structure tailored to AI transformation.

2. Concerns in the Core Business: Advertising Revenue Declines by 18%

While the “massive loss” is a result of financial adjustments, the pressures faced by Baidu's core business are very real.

In this quarter, Baidu's core revenues were 24.7 billion yuan, a 7% year-on-year decrease. Among this, online marketing revenue (advertising), once the “cash cow,” was 15.3 billion yuan, a significant 18% year-on-year decline.

The main reasons for this situation are twofold:

Weak Macro Environment: CFO He Haijian directly stated in the financial results that the growth of the intelligent cloud business has effectively mitigated the impact of the “weakness in the online marketing business.”

AI Reconstruction of Search: Baidu is aggressively transforming search with AI. The financial results revealed that in October 2025, approximately 70% of mobile search results pages included AI-generated content. This shift from “link-based search” to “generative search” is inevitably squeezing traditional advertising inventory and click-through rates in the short term, with the commercialization model currently in a transitional pain period.

3. Shifting Gears: The “Three Pillars” of AI Business

In stark contrast to the decline in the advertising business is the growth of Baidu's non-online marketing revenues. Revenues in this segment were 9.3 billion yuan this quarter, a 21% year-on-year increase, primarily driven by the intelligent cloud business.

Baidu introduced an “AI-native perspective” for the first time this quarter to disclose its performance, indicating management's desire for the market to value Baidu under a new logic. AI-related new businesses generated approximately 10 billion yuan in revenue in Q3, a more than 50% year-on-year increase. Specifically:

Intelligent Cloud Infrastructure (AI Computing Power): Revenues were 4.2 billion yuan, a 33% year-on-year increase. Subscription revenues for AI high-performance computing facilities surged by 128% year-on-year, indicating strong corporate demand for computing power for large model training and inference.

AI-Native Marketing Services: Revenues were 2.8 billion yuan, a staggering 262% year-on-year increase. This is Baidu's key effort to revive its advertising business—getting clients to pay for more effective, Agent-based AI marketing solutions.

AI Applications: Revenues were 2.6 billion yuan, a 6% year-on-year increase. While the growth rate is not as high as the other two, subscription models represented by Baidu Wenku and Baidu Netdisk provide high-quality cash flow.

4. Apollo Go: On the Eve of Scaling Up

Besides cloud and advertising, Baidu's autonomous driving business, Apollo Go, is accelerating toward a viable commercial model.

Surge in Orders: Fully driverless autonomous driving operation orders reached 3.1 million in Q3, with the year-on-year growth rate accelerating from 148% to 212%.

Fully Driverless Operations: 100% fully driverless operations have been achieved in all operating cities in China (including Beijing, Shanghai, Guangzhou, and Shenzhen).

This means Baidu has moved past the most expensive phase of “not only needing safety drivers but also bearing R&D costs” and is now sprinting toward the profitability breakeven point of large-scale driverless operations. Meanwhile, its business has begun expanding to overseas markets such as Switzerland and Abu Dhabi.

Conclusion

Baidu's Q3 financial results, which show a “massive loss,” are actually a declaration of “confirming the costs of transformation.”

Behind the 11.2 billion yuan loss figure, Baidu is shedding historical burdens through asset impairments to break free from its reliance on traditional search advertising. While its core advertising business is undergoing transitional pains, the rapid growth of its AI cloud infrastructure, AI-native marketing, and autonomous driving businesses demonstrates that Baidu's technological investments are translating into actual revenues.

AI Capital Bureau believes that Baidu is no longer just a pure search advertising company but rather an AI infrastructure and application service provider in the midst of a “transition from old to new growth drivers.”

AI Capital Bureau is a professional observation and analysis platform focused on capital market dynamics in the artificial intelligence field. We closely track AI companies' capital operations, including financing, listings, and mergers and acquisitions, and conduct in-depth analyses of industry trends and investment opportunities to provide valuable insights for industry participants. In an era of rapid AI technological development and deep capital integration, we are committed to becoming a bridge connecting AI innovation and the capital markets, helping Chinese AI companies realize value discovery and growth.

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