Baidu NASDAQ: BIDU reported a return to revenue growth in its first quarter of 2026, with management emphasizing that artificial intelligence has become the company’s primary growth engine and now accounts for a majority of its general business revenue.
Co-founder and Chief Executive Robin Li said Baidu General Business revenue reached CNY 26.0 billion in the quarter, up 2% year over year. Revenue from the company’s core AI-powered business rose 49% year over year to CNY 13.6 billion, accounting for 52% of Baidu General Business revenue for the first time.
“This is an important milestone as AI-powered business has now become the majority of our revenue mix,” Li said. “Together, these results confirm that AI has clearly become the primary growth driver of Baidu, reinforcing our position as an AI-first company.”
AI Cloud Infrastructure Drives Growth
Li said AI Cloud Infrastructure revenue grew 79% year over year in the quarter, with GPU Cloud revenue accelerating to 184% year-over-year growth, following 143% growth in the prior quarter. He said demand is rising across both training and inference workloads, with inference growing particularly quickly.
Baidu attributed the momentum to its full-stack AI capabilities, including proprietary infrastructure, foundation models and applications. Li highlighted Kunlunxin, Baidu’s self-developed AI chips, saying the chips are seeing expanding demand from customers across industries and have been deployed in a single AI computing cluster of more than 30,000 accelerators.
Dou Shen, executive vice president and president of Baidu AI Cloud Group, said in response to an analyst question that enterprise demand for AI infrastructure remains strong across sectors including aeronautics, autonomous driving, onboard AI, gaming and advanced manufacturing. He said Baidu is also winning customers in industries that historically had not been heavy users of AI or cloud computing, such as retail and IP-based consumer brands.
Shen said GPU Cloud generally carries a better margin profile than traditional CPU cloud because of higher technical complexity, tight supply, strong demand and customers’ emphasis on performance and stability. He added that Kunlun AI chips and Baidu’s full-stack AI capabilities give the company more room to optimize costs.
Financial Results Show Improved Efficiency
Chief Financial Officer Henry He said Baidu’s total revenue was CNY 32.1 billion in the first quarter, down 2% sequentially. Baidu General Business revenue was CNY 26.0 billion, up 2% year over year and flat quarter over quarter. Revenue from iQIYI was CNY 6.2 billion, down 8% quarter over quarter.
Cost of revenues was CNY 19.6 billion, up 7% quarter over quarter, primarily due to higher AI Cloud-related costs, partially offset by lower content costs and traffic acquisition costs. Operating expenses fell 28% quarter over quarter to CNY 9.3 billion, which the company attributed mainly to lower expected credit losses and personnel-related expenses.
Baidu reported operating income of CNY 3.2 billion and an operating margin of 10%. Non-GAAP operating income was CNY 3.8 billion, with a non-GAAP operating margin of 12%. Net income attributable to Baidu was CNY 3.4 billion, or CNY 8.76 per diluted ADS. Non-GAAP net income attributable to Baidu was CNY 4.3 billion, or CNY 12.06 per diluted ADS.
He said Baidu’s operating cash flow was CNY 2.7 billion, marking the third consecutive quarter of positive operating cash flow. Total cash and investments stood at CNY 279.3 billion as of March 31, 2026.
AI Applications Expand Across Search, Agents and Digital Humans
Li said Baidu continues to focus on AI applications, arguing that the value of AI is ultimately realized at the application layer. He highlighted several products, including DuMate, an AI agent designed to execute complex workflows across applications and files; Miaoda, a “vibe coding” platform that allows users to build applications without writing code; and Famou Agent, an enterprise-focused agent for complex operational problems.
Li said Miaoda’s monthly active users grew about 70% quarter over quarter in March, while its domestic paying user rate reached roughly three times the level at the end of last year. Baidu also launched Miaoda 3.0, adding an enterprise version and a mobile app.
In digital humans, Li said Baidu achieved about an 80% cost reduction over the past two quarters, lowering adoption barriers for clients. The company also launched an overseas digital human platform supporting 24 languages, including Spanish, French and Thai, aimed at merchants and creators for use cases such as e-commerce livestreaming and digital human videos.
On search, Li said Baidu continued to improve AI-generated search results and reduce low-quality content. He said daily active users of Ernie Assistant nearly doubled year over year in March, while daily average conversation rounds more than tripled.
Asked about monetization, Li said AI search is more advertising-based, while digital humans, Miaoda and Famou Agent are more likely to use subscription, usage-based or token-based pricing. He said the broader industry remains in an early stage, but he expects monetization to become more results-oriented over time as AI agents complete more tasks for users.
Apollo Go Scales Driverless Ride-Hailing
Li said Apollo Go delivered 3.2 million fully driverless rides in the first quarter, sustaining triple-digit year-over-year growth in total rides. He said Apollo Go had completed more than 22 million cumulative rides as of April.
The company is also expanding internationally. Li said Baidu is preparing to begin open-road testing in Switzerland, vehicles have arrived in London for testing with Uber and Lyft, and fully driverless operations are running across multiple zones in Dubai. Baidu also launched the Apollo Go app in Dubai in late March, which Li described as the first standalone app for an autonomous ride-hailing service there.
Li said Apollo Go has achieved unit economics breakeven in its largest operational city in China, Wuhan, despite low fare levels. He said international markets could offer more attractive pricing, but added that the robotaxi industry’s value chain and business models are still developing.
Investment Plans and Capital Allocation
He said Baidu will maintain investment in AI while preserving financial discipline. He noted that the company is using financing channels including operating leases, financial leases and low-cost bank borrowings to support AI investments while maintaining its cash position and balance sheet.
He also said shareholder returns remain a priority, referencing a recently announced buyback program and the company’s first dividend policy. On a potential dual primary listing in Hong Kong, He said Baidu continues to evaluate capital market initiatives and would update the market when there are meaningful developments.
Management said Baidu’s long-term margin trajectory should benefit from a shift toward higher-margin AI businesses, including GPU Cloud, AI applications and robotaxi operations, as well as cost optimization, internal AI-driven productivity gains and improved server utilization.
About Baidu NASDAQ: BIDU
Baidu, Inc, founded in 2000 and headquartered in Beijing, is a Chinese multinational technology company best known for operating one of China's leading internet search engines. The company built its business around online search and related advertising services, providing search, content aggregation and targeted ad placements to consumers and marketers across China. Baidu went public on the NASDAQ in 2005 and has since diversified beyond search into a broader technology and AI-focused portfolio.
Core products and services include the Baidu search platform and mobile app, Baidu Maps and Baidu Baike (an online encyclopedia), along with digital content initiatives.
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