Baidu’s $11B AI Reality Check: Advertising Decline Outpaces Cloud Growth

Baidu's market value plummeted 20% as investors reassess its AI-driven future against deteriorating ad revenues. The Chinese tech giant reported RMB 15.3B in online marketing revenue for 2024—an 18% annual drop—while overall revenue fell 7% to RMB 31.2B. Earnings per share cratered 56.75%, exposing the unsustainable gap between legacy advertising and experimental AI ventures.

Bright spots emerge in cloud computing, where AI-driven revenue grew 21% to RMB 6.2B, and native AI marketing services surged 262% to RMB 2.8B. Yet these gains remain insufficient to offset Core business erosion. 'The math doesn't work yet,' says Ming Zhao of Beijing-based consultancy Satori Research. 'Every RMB lost in ads requires three RMB in AI growth—and that assumes margins hold.'

Pressure mounts as Baidu attempts to fund AI search development through shrinking ad profits. The company now faces a pivotal choice: accelerate painful restructuring or risk becoming China's cautionary tale of technological transition.