Strong Revenue Growth in AI Cloud: Baidu reported Q1 2025 total revenue of RMB 32.5 billion, a 3% year-over-year increase. The Baidu Core revenue reached RMB 25.5 billion, up 7% year-over-year, driven primarily by the AI Cloud segment which generated RMB 6.7 billion with a robust 42% year-over-year growth. AI Cloud accounted for 26% of Baidu Core revenue, up from 20% a year ago.
AI Model Iteration and Open Source Strategy: Baidu is focusing on rapid iterations of its ERNIE foundation models, with significant developments such as ERNIE 4.5 and X1 launched this year. The company plans to open-source its ERNIE 4.5 series on June 30, 2025, which is expected to broaden accessibility and enhance market recognition.
Challenges in Search Monetization: While Baidu is accelerating its AI transformation in search, transitioning 35% of mobile search result pages to AI-generated content, the company recognizes challenges in monetization. The need to refine monetization strategies for AI searches could pressure revenue and margins in the near term, casting uncertainty over short-term earnings.