By Beilong Industry Research
Baidu’s (9888.HK) fourth quarter and full-year financial report, released on Feb. 26, marked the first time the company has disclosed a critical metric: the share of revenue coming from its artificial intelligence (AI) business.
Baidu’s total revenue for full-year 2025 was 129.1 billion yuan, with AI business revenue amounting to 40 billion yuan. Total revenue in the fourth quarter stood at 32.7 billion yuan, with AI accounting for 43% of core business revenue, exceeding market expectations.
This disclosure reflects a fundamental transformation in Baidu’s business model: its substantial technology investments have achieved commercial viability and are now generating tangible revenue across multiple fronts, including cloud services, applications, and autonomous driving. More importantly, the revenue is coming from enterprises and users paying for demonstrable outcomes, rather than traffic acquired through short-term subsidies.
Given that the revenue contribution of the AI business can now be consistently tracked and AI is beginning to activate three major growth engines — enterprise (B2B), consumer (B2C), and Robotaxi — investors may need to reexamine Baidu’s intrinsic value.
Growth model transformed
A breakdown of the earnings report shows Baidu’s growth model is undergoing a substantive transformation.
Historically, the market saw Baidu as three separate valuation components — search, cloud, and autonomous driving. However, the advent of AI is bringing everything together, enabling the use of the same technology across diverse scenarios and products to drive multi-endpoint output. This is a manifestation of the genuine value proposition of its full-stack strategic positioning.
Baidu’s AI cloud business achieved full-year revenue growth of 34% and fourth-quarter subscription revenue from AI high-performance computing infrastructure surged 143% year-on-year, accelerating from a 128% pace in the third quarter.
Citic Securities has estimated that robust demand for AI model training and inference will continue to propel earnings growth for cloud service providers and forecasts that cloud computing revenue growth in 2026 will further accelerate compared with 2025, maintaining a positive outlook for investment opportunities in first-tier cloud providers throughout 2026.
This forecast aligns closely with Baidu’s operational performance. Throughout 2025, Baidu Intelligent Cloud secured dual first-place rankings in both the number and total value of large model-related secured contracts, maintaining its position as the cloud service provider with the highest contract awards and value for two consecutive years.
The Kunlun chip weapon
Citic Securities notes that the current AI cloud market is dominated by basic computing power leasing models, where core competitive differentiation is centered on three things: the velocity of flagship chip acquisition, the scale of clusters, and the efficiency of deployment. This is where Baidu’s self-developed Kunlun chip comes into play.
Kunlun chip is architecturally engineered for AI from the ground level, delivering large-scale, stable, and high-performance AI computing. Moreover, its compatibility with mainstream models and frameworks enables enterprises to achieve faster deployment with lower integration costs.
In early 2026, Kunlun chip submitted an application to list on the Hong Kong Stock Exchange, an event JPMorgan Chase says will serve as a pivotal catalyst for the restructuring of Baidu’s valuation framework.
Baidu’s earnings report shows the company is emerging as a benchmark case study for commercially viable AI. Achievements including ranking first in both cloud contract awards and value, Wenxin Assistant, an AI-powered conversational assistant, surpassing 200 million monthly active users, and the rollout of its robotaxi service Apollo Go in Dubai — illustrate how the value of its full-stack strategy is transitioning from expectation into demonstrated reality.
A rerating is on the cards
In early 2026, Baidu announced a $5 billion stock buyback program, roughly 10% of its market value at the time, far exceeding conventional thresholds – Apple and Google usually repurchase only between 2% to 4% of their market cap while Meta increments only to approximately 5%. This ambitious program signals management’s conviction that the Baidu is undervalued and implies significant potential for share price recovery.
Baidu also announced it plans to start paying dividends by the end of 2026, demonstrating confidence in its future capacity to generate a growing percentage of profit from AI. Historically, consistent shareholder returns have served as a foundation for long-term value accumulation: Apple shares surged over 700% after it resumed dividend payouts in 2012; Microsoft’s market capitalization jumped from $250 billion to $3 trillion after starting dividend payments in 2003.
Baidu is undergoing a fundamental transformation in its core value proposition. When capital markets fully recognize this through a comprehensive re-rating appears increasingly likely to be a question of timing alone.
