Baidu Q2 sees revenue dip, plans robotaxi rollout in SG, Malaysia

Baidu reported a 4% drop in revenue to 32.7 billion yuan (US$4.6 billion) for Q2 2025, aligning with analyst expectations.

Net income reached 7.3 billion yuan (US$1.03 billion), nearly double projections.

Baidu, a major Chinese internet search and AI company, faces growing competition in generative AI from rivals such as Alibaba, Tencent, and open-source models like DeepSeek.

Its core search business continues to lose ground to social-video platforms like Xiaohongshu and Douyin, while ad revenue remains sensitive to fluctuations in China’s economy.

Baidu has abandoned its paid subscription model for the Ernie chatbot and open-sourced parts of the technology as competitors advance.

The company plans to expand its Apollo Go robotaxi service to Singapore and Malaysia this year, and is currently running trials in Hong Kong.

Baidu’s stock has risen about 6% in 2025, trailing gains seen by Alibaba and Tencent.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Search advertising dependency creates long-term vulnerability despite early dominance

Baidu’s current struggles reflect a decade-old strategic weakness that’s finally catching up with the company.

In 2015, search advertising represented 97% of Baidu’s revenue, making it dangerously dependent on a single income stream2. The Wei Zexi medical scandal in 2016 served as an early warning, cutting the company’s quarterly revenue expectations by RMB 2 billion and highlighting the risks of this narrow focus2.

Now that vulnerability is fully exposed as social-video platforms like Douyin and Xiaohongshu capture user attention that traditionally went to search.

The financial data shows this decline isn’t sudden. Baidu’s net profit margins have steadily eroded from 40% in 2010 to a projected 20% by 2025, reflecting the company’s struggle to diversify beyond its core advertising model3.

This contrasts with competitors like Alibaba and Tencent, who built diverse revenue streams early and now have “far bigger firepower” in the AI competition1.