Amidst the relentless march of technological advancements, the cloud computing sector has become a battleground of fierce competition. As a pivotal player, Baidu Intelligent Cloud has registered notable achievements in recent years.

In 2024, Baidu Intelligent Cloud's fourth-quarter revenue surged by 26% year-on-year, marking an impressive growth rate within the industry. This robust momentum persisted throughout the year, with revenues reaching 4.7 billion yuan in Q1 (a 12% YoY increase) and 5.1 billion yuan in Q2 (a 14% YoY increase). These figures underscore Baidu Intelligent Cloud's rapid revenue growth and robust development potential.

Despite these impressive results, the market appears dissatisfied with Baidu Intelligent Cloud's performance. In 2024, Baidu's share price fluctuated, even declining on some trading days, despite the strong revenue growth. This divergence between revenue growth and share price performance is perplexing and has sparked intense debate among market participants. Typically, robust business growth boosts market confidence and drives share prices upwards, but in Baidu Intelligent Cloud's case, the opposite has occurred. What lies behind this anomaly?

Analysis of Intelligent Cloud Growth Trends

Baidu Intelligent Cloud's revenue growth figures are undeniably impressive. In Q4 2024, revenue increased by 26% YoY, outpacing many competitors in the cloud computing market. Throughout the year, multiple quarters maintained this growth trajectory, with Q1 revenues at 4.7 billion yuan (12% YoY increase), Q2 revenues at 5.1 billion yuan (14% YoY increase), and Q3 revenues at 4.9 billion yuan (11% YoY increase). These data clearly demonstrate Baidu Intelligent Cloud's significant expansion and continuous revenue growth.

In terms of project wins, Baidu Intelligent Cloud has also excelled. In 2024, it ranked first in three categories of large model project wins, with a total of 910 wins—4.5 times that of 2023—and a total bid amount of 2.52 billion yuan, four times that of 2023. Baidu Intelligent Cloud led in project wins, industry coverage, and central and state-owned enterprise project wins. Among the top five industries in terms of large model project wins—telecommunications, energy, education, government, and finance—Baidu Intelligent Cloud ranked first in the energy, government, and finance sectors. This indicates widespread penetration into key industries, high market recognition, and continuous business expansion.

Furthermore, Baidu Intelligent Cloud's technological prowess continues to advance, exemplified by the successful launch of the Kunlun Core 3rd Generation 10,000-card cluster, showcasing its deep technical accumulation in chips and computing power clusters. As the first domestically developed 10,000-card cluster, it offers unparalleled parallel computing capabilities, significantly enhancing training efficiency. This cluster reduces the training cycle for models with hundreds of billions of parameters, supports larger models and complex tasks, and enables multitasking concurrency, reducing waste and training costs.

In addition to the Kunlun Core cluster, Baidu Intelligent Cloud is making strides in deep learning frameworks and large models. Its PaddlePaddle framework boasts over 18.08 million developers and serves 430,000 enterprises, establishing itself as the preferred choice for Chinese developers. The ERNIE large model matrix is continuously evolving, from flagship models like ERNIE 4.0 Turbo to lightweight models like ERNIE Speed Pro, supporting multimodal upgrades. In 2025, ERNIE 5.0 will be released, further enhancing model performance and application scope. These technological breakthroughs provide a solid foundation for Baidu Intelligent Cloud's business growth, bolstering its competitiveness in cloud computing and AI.

Multi-dimensional Factors Affecting Market Confidence

In the fiercely competitive cloud computing market, Baidu Intelligent Cloud faces significant challenges from competitors.

Emerging forces like DeepSeek have surged ahead, rapidly capturing market share in the large model sector with their unique technological advantages and open-source strategies. By reducing computing power costs and adopting an open-source approach, DeepSeek has attracted numerous developers and enterprises, posing a direct threat to Baidu Intelligent Cloud's market position. Over 200 leading enterprises have integrated and deployed DeepSeek's technical interfaces across industries such as technology, mobile phone manufacturers, automobiles, and finance.

Established giants like Alibaba Cloud and Tencent Cloud also present formidable competition. Alibaba Cloud, the leader in China's cloud computing market, has occupied the top position in market share for multiple consecutive years, thanks to its self-developed Flying Operating System and over 200 solutions tailored to different industries and enterprises. Tencent Cloud, on the other hand, excels in cloud computing services related to the internet, including gaming, social media, and video, leveraging Tencent's big data and social media systems to form differentiated competitive advantages.

In such a competitive environment, while Baidu Intelligent Cloud has unique advantages in integrating AI and cloud computing, breaking through and further expanding its market share is challenging. This uncertainty makes the market somewhat reserved about its future development.

Moreover, concerns within Baidu's business structure have affected market confidence in Baidu Intelligent Cloud. The advertising business, Baidu's traditional core, has seen continuous revenue declines in recent years. In Q4 2024, online marketing revenue decreased by 7% YoY, with full-year revenue down by 3%. Advertising revenue still accounts for a significant portion of the company's total revenue (59% in 2024). The decline is partly due to the macroeconomic environment and reduced advertising budgets, as well as competition from new advertising models and platforms like Douyin and Xiaohongshu.

While the intelligent cloud business is growing rapidly, it still accounts for a relatively small proportion of Baidu's overall business structure. Additionally, significant upfront costs for technological research and development, infrastructure construction, and a longer profit cycle put pressure on the company's financial situation in the short term. The market is concerned about whether the intelligent cloud business can become a pillar supporting Baidu's overall performance amidst the decline in the advertising business. This uncertainty has affected investors' confidence in Baidu, reflecting on market confidence in Baidu Intelligent Cloud.

Finally, Baidu's strategic adjustments have raised doubts in the market. In February 2025, Baidu announced that ERNIE Bot would be fully free starting from April 1 and would successively launch the ERNIE large model 4.5 series, officially open-sourcing it from June 30. While aimed at responding to market competition and attracting more users and developers, this strategy has sparked market doubts. The free strategy may impact short-term revenue from the large model business, and the open-source approach, while promoting technology adoption and ecosystem prosperity, faces the risk of technology imitation by competitors, intensifying market competition.

Investors also have concerns about Baidu Intelligent Cloud's commercialization path. Despite achievements in technology and business expansion, converting technological advantages into stable commercial revenue and achieving sustainable profit growth remains a challenge. Against the backdrop of strategic adjustments, market confidence in Baidu Intelligent Cloud's ability to find an effective commercialization path and achieve profit growth amidst fierce competition is not strong.

These doubts about strategic adjustments and commercialization paths have made the market cautious about Baidu Intelligent Cloud's future development.

Path to Breaking the Deadlock and Future Outlook

Faced with lagging market confidence, Baidu is taking proactive measures. In terms of technological innovation, it continues to invest heavily, optimizing the ERNIE large model, and plans to release ERNIE 5.0 in 2025 to enhance model performance and intelligence, maintaining its technological leadership. Simultaneously, Baidu is strengthening chip technology research and development, with the Kunlun Core 3rd Generation 10,000-card cluster representing a significant breakthrough in computing power, set to meet growing AI computing demands.

In market expansion, Baidu Intelligent Cloud is actively collaborating with enterprises across industries to broaden its footprint. It has partnered with China Southern Power Grid to create a large model for the power industry, enhancing grid intelligence across transmission, substation, distribution, dispatch, customer service, and planning. It has also worked with the Chinese National Diving Team to apply the ERNIE large model to an intelligent diving auxiliary training system, supporting athlete development. Baidu is also strengthening its international presence, expanding overseas business, and enhancing global influence.

In business synergy, Baidu integrates internal resources to foster synergetic development between intelligent cloud and other businesses. ERNIE Bot is deeply integrated with Baidu Search, Baidu Library, and other services, enhancing user experience and providing more intelligent services. Through synergy, resource sharing and complementary advantages are realized, boosting overall business competitiveness.

From an industry perspective, the prospects for cloud computing and AI markets are promising. With the acceleration of digital transformation, demand for cloud computing and AI technologies across industries is growing, providing a favorable market environment for Baidu Intelligent Cloud. The advancement of the "AI+" initiative will further promote AI integration into various industries, fully leveraging Baidu Intelligent Cloud's AI technology advantages.

Baidu itself possesses numerous strengths, including deep AI technological accumulations, core technologies like self-developed chips, deep learning frameworks, and large models, forming a comprehensive technology stack with strong innovation capabilities. Baidu Intelligent Cloud leads the large model industry in terms of landing scale, providing AI services to over half of central enterprises, with rich industry application experience, extensive customer resources, and high brand awareness.

However, challenges remain. Industry competition is fierce, with pressure from emerging forces and established giants. Baidu must continuously innovate and enhance competitiveness to stand out. Business structure adjustment and strategic transformation require time and cost, necessitating a balanced approach to maintain stable business growth and achieve profit targets during the transformation. Market confidence in Baidu Intelligent Cloud will take time to recover, requiring Baidu to demonstrate its development potential and value through continuous technological innovation and business growth.

Overall, the future trajectory of Baidu Intelligent Cloud is fraught with both promising opportunities and formidable challenges. Should Baidu manage to fully capitalize on its strengths, adeptly navigate challenges, relentlessly drive technological innovation and market expansion, and refine its business structure and strategic blueprint, Baidu Intelligent Cloud is poised to regain market trust, achieve remarkable growth, and secure a pivotal position in the realms of cloud computing and artificial intelligence.

Conclusion: Navigating Choices and Embracing Opportunities Amidst Transformation

Within the cloud computing landscape, Baidu Intelligent Cloud boasts impressive data expansion but grapples with a lack of market confidence. Heightened industry competition, underlying concerns in its business framework, and skepticism towards strategic shifts present formidable obstacles. However, Baidu is not passive but is proactively implementing countermeasures, emphasizing technological innovation, market penetration, and business synergies to break the stalemate.

Looking ahead, the expansive potential of the cloud computing and AI markets offers a fertile terrain for Baidu Intelligent Cloud's development, with its technological prowess and industry application expertise serving as invaluable assets. Nonetheless, challenges persist, and market unpredictability along with competitive pressures necessitate that Baidu surmount each hurdle. Whether Baidu Intelligent Cloud will emerge victorious from this transformation and rekindle market confidence remains to be seen.