Baidu Inc. (NASDAQ:BIDU) stock fell Tuesday after the company reported second-quarter 2026 revenue and adjusted earnings that missed analyst estimates.
Baidu Earnings, Revenue Miss As Advertising Slumps
Baidu reported revenue of 31.3 billion yuan ($4.62 billion), down 4% year over year and missing the $4.65 billion analyst estimate.
GAAP diluted earnings were 5.74 yuan (85 cents) per American depositary share. Adjusted earnings of 7.22 yuan ($1.06) per ADS missed the $1.35 analyst estimate.
Operating income was 3 billion yuan, representing a 10% margin. Adjusted operating income was 3.8 billion yuan, with a 12% margin.
The results came under pressure from Baidu’s online advertising business. Online Marketing Services revenue fell 19% year over year to 13.1 billion yuan.
AI Growth Offsets Advertising Weakness
Adjusted EBITDA was 6.2 billion yuan, representing a 20% margin.
General Business revenue fell 4% to 25.2 billion yuan. Its operating margin was 12%, while its adjusted operating margin was 15%.
Meanwhile, iQIYI revenue declined 5% to 6.3 billion yuan. The business posted a negative 2% operating margin and a roughly flat adjusted operating margin.
Baidu’s AI businesses continued to expand. AI Cloud Infrastructure revenue jumped 50% to 7.3 billion yuan, while GPU Cloud revenue surged 283%.
AI Applications revenue rose 3% to 2.5 billion yuan. AI-native Marketing Services revenue was roughly flat at 2.6 billion yuan.
Baidu Core AI-powered Business revenue climbed 25% to 12.5 billion yuan, accounting for 50% of General Business revenue.
AI Adoption, Apollo Go Expand
AI daily active user penetration across Baidu Wenku and Baidu Drive increased 27.4% year over year in June. Baidu App monthly active users reached 644 million.
Apollo Go expanded to 28 cities and surpassed 350 million cumulative autonomous kilometers, including more than 240 million fully driverless kilometers.
The robotaxi service launched fully driverless commercial operations in Dubai and began open-road testing in London and Switzerland.
Baidu also signed a memorandum of understanding with Kazakhstan’s Turlov Private Holding Ltd. to explore autonomous ride-hailing services.
Cash Flow, Capital Spending
Operating cash flow rose to 3.4 billion yuan from 2.67 billion yuan in the previous quarter. That compared with an outflow of 877 million yuan a year earlier.
However, free cash flow fell to negative 7.95 billion yuan from negative 3.25 billion yuan sequentially and negative 4.68 billion yuan a year earlier.
The decline came as capital expenditures jumped to 11.39 billion yuan from 5.92 billion yuan in the first quarter.
Baidu ended the quarter with 24.5 billion yuan in cash and cash equivalents. Total cash and investments stood at 283.1 billion yuan.
Hong Kong Listing, AI Investment
Other income, net, fell to 184 million yuan. Baidu attributed the decline mainly to lower fair-value gains on long-term investments and higher net foreign-exchange losses.
Baidu expects the conversion of its Hong Kong listing to a dual-primary listing to take effect in 2026, subject to shareholder and exchange approvals.
Management said the company remains committed to investing in AI as a core driver of long-term growth.
Baidu Price Action
BIDU Price Action: Baidu shares were trading 7.05% lower at $96.78 in Tuesday’s premarket session, according to Benzinga Pro data.
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