AI TRENDS | Baidu's Core Business Revenue Declines Amid AI Growth, Lyon Reports

On May 11, Lyon released a report indicating that Baidu's core business revenue for the first quarter is expected to decrease by 2.5% year-on-year to 24.8 billion yuan, primarily due to a more than 20% drop in marketing revenue. According to Jin10, AI-related business revenue is projected to grow by 39% to 12.4 billion yuan, accounting for 50% of BGB revenue. AI cloud infrastructure has emerged as a new growth engine, benefiting from a surge in inference workloads, with revenue increasing by over 40% year-on-year. Management anticipates that BGB's total revenue will grow by 1.8% year-on-year in the second quarter, with profit margins continuing to improve sequentially. Baidu's Kunlun chip spin-off plan is progressing smoothly, and the company plans to enhance shareholder returns through share buybacks and dividends. Lyon expects Baidu's BGB marketing revenue to decline by 21% year-on-year in the first quarter, a larger drop compared to the 16% decrease in the fourth quarter of 2025. This is mainly due to the late Lunar New Year affecting seasonal performance and increasing competition in the AI advertising sector. However, AI-native marketing business has performed well, with revenue expected to grow significantly by 65% year-on-year to 2.8 billion yuan, representing 22% of BGB's total marketing revenue. Lyon maintains an 'outperform' rating for Baidu, with a target price of $176.