• Baidu reported a smaller-than-expected revenue decline, easing fears that its search and AI businesses are crumbling under rising competition. Revenue fell 2% to 34.1 billion yuan ($4.7 billion), exceeding analyst expectations of 33.4 billion yuan, while net income grew due to a one-time foreign currency gain. Despite a 26% surge in cloud revenue, Baidu struggled with shrinking ad sales as it lost market share to social platforms like Xiaohongshu and Douyin. Meanwhile, Hangzhou-based DeepSeek’s AI breakthrough—built on open-source models—undercuts Baidu’s proprietary AI strategy, raising concerns over its future leadership in the sector.

• Baidu’s AI ambitions face mounting pressure, prompting a shift to open-source models and integration of DeepSeek’s latest technology into its chatbot. The company remains one of China’s top AI investors, recently collaborating with Apple on AI-powered image search. However, profitability remains a challenge, with operating profit down 29%and margins missing expectations. Baidu’s absence from a high-profile meeting with Xi Jinping—attended by Jack Ma and DeepSeek’s leadership—raises speculation over its standing with Beijing. Despite these concerns, CEO Robin Li emphasized on an earnings call that Baidu is committed to advancing AI transformation and shaping the future of search technology.