Baidu Bets Big on AI: Is the Cloud Business Finally Paying Off?

Baidu BIDU is beginning to see real traction from its years-long investment in artificial intelligence (AI), with AI Cloud emerging as a key driver of growth and profitability. While macro pressures and regulatory uncertainty still weigh on China's tech landscape, Baidu's cloud transformation signals a notable shift in the company's core business dynamics. AI Cloud revenue jumped 42% year over year to RMB6.7 billion, now contributing 26% of Baidu Core revenue, up from 20% a year earlier. This growth is fueled by rising enterprise demand for generative AI capabilities and foundation models, delivered primarily through Qianfan, Baidu's Model-as-a-Service (MaaS) platform.The company's emphasis on full-stack AI infrastructure and continual model optimization, evidenced by the recent launches of ERNIE 4.5 Turbo and ERNIE X1 Turbo, has significantly cut inference costs while improving output quality. These improvements are making Baidu's AI Cloud more attractive to clients seeking scalable and cost-efficient AI deployments.Importantly, Baidu has shifted its cloud revenue mix toward subscription-based models, offering greater visibility and sustainability. Management emphasized that subscription revenues now make up the majority of enterprise cloud sales, with Gen AI-related subscription revenue growing at triple-digit rates for multiple quarters.Profitability is also on an upswing, with non-GAAP operating margins for AI Cloud reaching the mid-teens. However, Baidu continues to reinvest aggressively in AI infrastructure and emerging applications, such as autonomous driving and Gen AI search, which may cap near-term margin expansion.Overall, Baidu's execution in cloud AI is gaining momentum, signaling that its multi-year bet on AI is not only paying off but also reshaping the company's long-term growth narrative.
As Baidu doubles down on AI Cloud, it faces formidable competition from Alibaba BABA and Tencent TCEHY, both are aggressively expanding their cloud footprints in China's evolving AI landscape. Alibaba Cloud, still the market leader by share, is integrating its proprietary Tongyi Qianwen foundation models into a broad range of enterprise services. With a massive installed base and strong ties across e-commerce and logistics, Alibaba offers both scale and cross-sector penetration that Baidu must contend with.Meanwhile, Tencent is leveraging its strengths in gaming, social platforms, and fintech to embed AI services into vertical applications. Tencent's Hunyuan model is gaining traction, and the company's approach emphasizes AI-as-a-service across its super app ecosystem.Where Baidu sets itself apart is through its deep stack integration, from chips to models to applications, via Qianfan.
Baidu shares have lost 5.3% in the past three months against the Zacks Internet - Services industry's 6.1% rise.
Image Source: Zacks Investment Research
BIDU's forward 12-month price/earnings ratio sits at 8.76, far below the industry average of 18.74.
Image Source: Zacks Investment Research
Over the past 30 days, the Zacks Consensus Estimate for Baidu's 2025 earnings per share has decreased, as you can see below.
Image Source: Zacks Investment Research
Baidu stock currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Baidu, Inc. (BIDU) : Free Stock Analysis Report
Tencent Holding Ltd. (TCEHY) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Wire

18 minutes ago

• Business Wire

Naspers Accelerates Growth and Profitability, With 18X Improvement in Ecommerce Adjusted EBIT

CAPE TOWN, South Africa--(BUSINESS WIRE)--Naspers Limited (Naspers) (JSE: NPN) delivered a strong performance during a transformative year, as we build the leading lifestyle ecommerce company in Latin America, Europe and India, driven by AI and innovation. Ecommerce revenue growth of 21%, to US$7.0bn. Adjusted EBIT increased 18 times to US$430m. iFood aEBIT grew 178%, OLX aEBIT up 61% and eMAG achieved profitability. Free cash flow improved by US$263m, excluding Tencent. US$7.8bn 1 invested to strengthen our regional ecosystems and expand our portfolio of AI-native startups. Buybacks returned over US$50bn 2, driving 15% NAV per share accretion. Fabricio Bloisi, Group CEO, Prosus and Naspers said: 'Naspers is rapidly transforming into an operating technology company, focused on lifestyle ecommerce, and powered by innovation and collaboration. This past year, we announced two significant deals to strengthen our regional ecosystems. We completed the acquisition of Despegar in May 2025 and are already integrating its products into iFood's Clube membership. We are making good progress with the purchase of Just Eat which will create a new AI-powered tech champion in Europe. 'I believe that truly great companies are shaped by their culture. Through 'The Prosus Way', we've implemented a cultural model that empowers our teams to deliver exceptional customer experiences through discipline, innovation and adopting an AI-first mindset. In the face of unprecedented technological disruption, we are now more connected and innovative than ever before. I'm confident that our enhanced culture and ecosystem approach will fuel our journey to create the next US$100bn in value.' Nico Marais, Group CFO, Prosus and Naspers, commented: 'The Group has delivered a strong financial performance over the past year, with topline growth in our operating businesses at double the rate of our peers. Ecommerce profitability has improved meaningfully from US$24m in FY24, to aEBIT of US$430m. We expect this momentum to continue, and to add at least the same level of incremental aEBIT in FY26. Free cash flow excluding the Tencent dividend improved by US$263m. As our financial position strengthens, we're able to share more with our shareholders, and have proposed a 100% increase in the Prosus dividend, to €0.20. The Group's disciplined capital allocation and strong balance sheet positions us well to execute on our ecosystem strategy.' Phuthi Mahanyele-Dabengwa, South Africa CEO and Executive Director, Naspers, commented: 'Our South African businesses have delivered strong results while making everyday life simpler, more connected, and more accessible. I'm proud of the progress we've made in building digital platforms that meet local needs, support small businesses, and create new digital career pathways. This is evident in the continued growth of the Takealot Group, which has grown GMV 26-fold over the past nine years to become South Africa's leading ecommerce platform. It's also evident in our two leading classifieds platforms — Property24 and AutoTrader — which continue to serve millions of users with trusted, market-leading services. As South Africa continues its journey of economic renewal, Naspers remains a committed long-term partner in building a more inclusive, innovative digital economy.' Peer-leading growth and accelerating profitability across Ecommerce portfolio Food Delivery: iFood delivers world-class performance, exceeding growth and profitability targets and drives innovation and ecosystem expansion iFood delivered strong top line growth, with Gross Merchandise Value (GMV) up 32%, orders up 29% and revenue increasing 30%. iFood's core food delivery business grew aEBIT by 71% to US$306m, improving aEBIT margin to 27%; performance driven by higher ad revenues, increased order frequency and retention driven by iFood's Clube loyalty programme, and investments in its merchant platform. iFood's growth initiatives grew revenue by 34%, driven by strong performance in its groceries marketplace and credit businesses. Overall, iFood achieved a record profit, with aEBIT of US$226m, up 178%. Delivery Hero grew GMV by 8% for FY24, with revenue up 24%, boosting profitability to an adjusted EBITDA of €693m (from €254m in FY23). From January to December 2024, Swiggy grew Gross Order Value (GOV) by 29%, while adjusted EBITDA losses reduced to US$182m, from US$261m in the prior year. In Q125, Swiggy delivered GOV growth of 40% year-on-year, and quick commerce GOV growth of 101% year-on-year, with 316 new dark stores added in the quarter. 3 All growth percentages shown here are in local currency terms, excluding the impact of acquisitions and disposals (M&A), unless otherwise stated. 4 Nominal basis Expand Classifieds – OLX Group: Strong performance, with a significant jump in profitability and expanding margins OLX consolidated revenue grew 18%, with standout performances by motors and real estate verticals. Motors and real estate grew revenue 24% and 23% respectively, through improved monetisation, innovative product development and new trust-building initiatives within motors, and product enhancements within real estate. aEBIT accelerated by 61% to US$270m, with aEBIT margin up 10pp, to 35%. Payments & Fintech – PayU: Strong topline growth and improving profitability, despite challenging market conditions India payments TPV 5 increased by 17%, and revenues by 14%; aEBIT loss of US$12m reflects increased competition, resulting in lower take rates. India payments achieved breakeven in H2. India credit grew its loan book by 19% and revenues by 63%; aEBIT loss of US$32m impacted by higher costs and increased consumer loan book losses. Iyzico grew revenues 87% to US$288m, while aEBIT of US$18m at a margin of 6% reflected rising interest rates and investments in strategic growth initiatives. GPO revenues up 23% to US$340m, with aEBIT of US$12m; sale of GPO's LatAm and Africa operations completed in March 2025, while GPO Europe sale is ongoing. Overall, PayU's aEBIT losses improved by >100% to US$11m. Etail: eMAG achieved overall profitability target for FY25 and Takealot grew strongly, cementing its leadership position through innovation and customer focus. eMAG grew strongly with GMV up 9%, and revenue up 12% to US$2.5bn. eMAG aEBIT improved by US$40m to US$14m; includes one-off costs in Hungary in H1. eMAG improved performance due to good growth in Romanian etail, and emerging logistics and grocery businesses. Takealot Group grew GMV by 13% and revenue by 15%, driven by investments in logistics, enhanced customer offerings and the TakealotMore subscription service. orders increased 15%, GMV up 13% and revenues grew 17%, with growth underpinned by expansion in emerging product categories. Mr D: Revenue grew 8%, with an 81% increase in groceries GMV and an improved aEBIT of US$4m, despite tough trading conditions. Please note: Group results are shown on a consolidated basis from continuing operations, which reflect all majority owned and managed businesses. All OLX Autos business units are classified as discontinued operations, in line with IFRS disclosures. All growth percentages shown here are in local currency terms, excluding the impact of acquisitions and disposals (M&A), unless otherwise stated. Growth percentages shown here for all non-financial key performance indicators compare FY25 to FY24. Expand For full details of the Group's results, please visit 5 Total Payment Volume Expand About Naspers Established in 1915, Naspers has transformed itself to become a global technology company and one of the largest technology investors in the world. Through Prosus, the group is building the world's leading lifestyle ecommerce brands, across Europe, India and Latin America, unlocking an AI-first world for our 2 billion customers. Prosus has its primary listing on Euronext Amsterdam, and a secondary listing on the Johannesburg Stock Exchange and Naspers is the majority owner of Prosus. In South Africa, Naspers is one of the foremost investors in the technology sector and is committed to building its internet and ecommerce companies. These include Takealot, Mr D Food, Autotrader, Property24 and PayU, in addition to Media24, South Africa's leading print and digital media business. Naspers has a primary listing on the Johannesburg Stock Exchange ( and a secondary listing on the A2X Exchange ( in South Africa and a level 1 American Depository Receipt (ADR) programme which trades on an over-the-counter basis in the US. For more information, please visit Naspers Labs In 2019, Naspers Labs, a youth development programme designed to transform and launch South Africa's unemployed youth into economic activity, was launched. Naspers Labs focuses on digital skills and training, enabling young people to pursue tech careers.

Business Wire

18 minutes ago

• Business Wire

Prosus Accelerates Growth and Profitability, with 12X Improvement in Ecommerce Adjusted EBIT and 100% Increase in Dividend

AMSTERDAM & JOHANNESBURG--(BUSINESS WIRE)--Prosus N.V. (Prosus) (AEX and JSE: PRX) delivered a strong performance during a transformative year. We have exceeded our profitability targets, as we build the leading lifestyle ecommerce company in Latin America, Europe and India, driven by AI and innovation. Ecommerce revenue growth of 21%, to US$6.2bn. Adjusted EBIT increased twelve times to US$443m, ahead of guidance. iFood aEBIT grew 178%, OLX aEBIT up 61% and eMAG achieved profitability. Free cash flow positive for the first time, excluding Tencent. 100% increase in dividend to €0.20. US$7.8bn 1 invested to strengthen our regional ecosystems and expand portfolio of AI-native startups. Buybacks 2 returned over US$50bn, driving 15% NAV per share accretion. Fabricio Bloisi, Prosus CEO, Prosus and Naspers said: 'Prosus is rapidly transforming into an operating technology company, focused on lifestyle ecommerce, and powered by innovation and collaboration. This past year, we announced two significant deals to strengthen our regional ecosystems. We completed the acquisition of Despegar in May 2025 and are already integrating its products into iFood's Clube membership. We are making good progress with the purchase of Just Eat which will create a new AI-powered tech champion in Europe. 'I believe that truly great companies are shaped by their culture. Through 'The Prosus Way', we've implemented a cultural model that empowers our teams to deliver exceptional customer experiences through discipline, innovation and adopting an AI-first mindset. In the face of unprecedented technological disruption, we are now more connected and innovative than ever before. I'm confident that our enhanced culture and ecosystem approach, powered by Prosus, will fuel our journey to create the next US$100bn in value.' Nico Marais, Prosus CFO, commented: 'Prosus has delivered a strong financial performance over the past year, with topline growth in our operating businesses at double the rate of our peers. Ecommerce profitability has improved meaningfully from US$38m in FY24, to aEBIT of US$443m, ahead of our guidance. We expect this momentum to continue, and to add at least the same level of incremental aEBIT in FY26. FY2025 marks the first year that Prosus is free cash flow positive, excluding the Tencent dividend, with a free cash flow improvement of US$513m. As our financial position strengthens, we're able to share more with our shareholders, and have proposed a 100% increase in our dividend, to €0.20. Our disciplined capital allocation and strong balance sheet positions us well to execute on our ecosystem strategy.' Group performance Peer-leading growth and accelerating profitability across Ecommerce portfolio Food Delivery: iFood delivers world-class performance, exceeding growth and profitability targets and drives innovation and ecosystem expansion iFood delivered strong top line growth, with Gross Merchandise Value (GMV) up 32%, orders up 29% and revenue increasing 30%. iFood's core food delivery business grew aEBIT by 71% to US$306m, improving aEBIT margin to 27%; performance driven by higher ad revenues, increased order frequency and retention driven by iFood's Clube loyalty programme, and investments in its merchant platform. iFood's growth initiatives grew revenue by 34%, driven by strong performance in its groceries marketplace and credit businesses. Overall, iFood achieved a record profit, with aEBIT of US$226m, up 178%. Delivery Hero grew GMV by 8% for FY24, with revenue up 24%, boosting profitability to an adjusted EBITDA of €693m (from €254m in FY23). From January to December 2024, Swiggy grew Gross Order Value (GOV) by 29%, while adjusted EBITDA losses reduced to US$182m, from US$261m in the prior year. In Q125, Swiggy delivered GOV growth of 40% year-on-year, and quick commerce GOV growth of 101% year-on-year, with 316 new dark stores added in the quarter. Classifieds – OLX Group: Strong performance, with a significant jump in profitability and expanding margins OLX consolidated revenue grew 18%, with standout performances by motors and real estate verticals. Motors and real estate grew revenue 24% and 23% respectively, through improved monetisation, innovative product development and new trust-building initiatives within motors, and product enhancements within real estate. aEBIT accelerated by 61% to US$270m, with aEBIT margin up 10pp, to 35%. Payments & Fintech – PayU: Strong topline growth and improving profitability, despite challenging market conditions India payments TPV 5 increased by 17%, and revenues by 14%; aEBIT loss of US$12m reflects increased competition, resulting in lower take rates. India payments achieved breakeven in H2. India credit grew its loan book by 19% and revenues by 63%; aEBIT loss of US$32m impacted by higher costs and increased consumer loan book losses. Iyzico grew revenues 87% to US$288m, while aEBIT of US$18m at a margin of 6% reflected rising interest rates and investments in strategic growth initiatives. Overall, PayU's aEBIT losses improved by >100% to US$11m. Etail: eMAG achieved target of overall profitability for FY25 Strong growth with GMV up 9%, and revenue up 12% to US$2.5bn. aEBIT improved by US$40m to US$14m; includes one-off costs in Hungary in H1. Improved performance due to good growth in Romanian etail, and emerging logistics and grocery businesses Please note: Group results are shown on a consolidated basis from continuing operations, which reflect all majority owned and managed businesses. All OLX Autos business units are classified as discontinued operations, in line with IFRS disclosures. All growth percentages shown here are in local currency terms, excluding the impact of acquisitions and disposals (M&A), unless otherwise stated. Growth percentages shown here for all non-financial key performance indicators compare FY25 to FY24. Expand For full details of the Group's results, please visit

Yahoo

a day ago

• Yahoo

These 2 AI Stocks Give You Access to China's ‘New AI Tiger' MiniMax

Chinese AI startup MiniMax is emerging as a formidable competitor to DeepSeek, having recently launched breakthrough products, including the M1 reasoning model, which uses less than half the computing power of DeepSeek-R1. The Shanghai-based company, valued at $2.5 billion in its March 2024 funding round, is preparing for a Hong Kong initial public offering (IPO) as early as this year. MiniMax represents one of China's 'four new AI tigers' competing against Western giants, such as OpenAI. The company's latest innovations include the Hailuo 02 video generator and MiniMax Agent, which indicate it is poised to gain traction in the generative AI space. Dear Tesla Stock Fans, Mark Your Calendars for June 30 The 'Golden Era' for Tesla Starts June 22. Should You Buy TSLA Stock First? Nvidia Is Quickly Approaching a New Record High. Is It Too Late to Buy NVDA Stock? Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. Investors can gain exposure to MiniMax through two major stakeholders: Alibaba (BABA) and Tencent (TCEHY), both of which are strategic investors in the startup. This provides retail investors with indirect access to one of China's most promising AI companies, without requiring them to wait for the IPO. However, industry experts warn that these so-called AI tigers face sustainability challenges, with most still burning cash while seeking viable profit models beyond free trials and limited enterprise customization. Valued at a market capitalization of $593 billion, Tencent is one of the largest companies in China. In Q1, it reported revenue of $25.1 billion, a 13% year-over-year increase, while net income grew 22% to $8.5 billion. The technology giant's gross profit exceeded $14 billion for the first time, demonstrating strong operational leverage across its diversified business portfolio. Tencent's strategic AI investments are already generating tangible returns across multiple segments. Marketing services revenue accelerated 20% year-over-year, benefiting from AI-powered advertising improvements that enhanced click-through rates from historical 1% levels to 3% in certain inventories. Domestic Games achieved exceptional 24% growth, with flagship titles like Honor of Kings and Peacekeeper Elite reaching record quarterly revenues, supported by AI-enhanced user engagement and content optimization. Tencent's Weixin ecosystem, serving 1.4 billion monthly active users, is becoming the centerpiece of its AI strategy. The tech giant has integrated the Yuanbao AI assistant directly into Weixin chats, enabling context-aware responses and content discovery. Weixin Search now incorporates large language model results, while AI-powered tools help content creators generate images and video effects, significantly reducing the time required for Mini Program development. The gaming portfolio demonstrated remarkable strength, with Delta Force achieving 12 million peak daily active users and becoming the highest-ranked new mobile game released in China over the past three years. International games grew 23% year-over-year, driven by titles including PUBG Mobile and Brawl Stars. Management emphasized that current AI investments represent a long-term value creation strategy, with CEO Pony Ma noting that while near-term costs may temporarily narrow operating leverage, these investments will generate 'substantial incremental returns' over the longer term. Tencent increased capital expenditures by 91% year-over-year to $3.8 billion, primarily for investments in GPUs and servers to enhance its AI capabilities. Out of the 16 analysts covering Tencent stock, 13 recommend 'Strong Buy,' two recommend 'Moderate Buy,' and one recommends 'Hold.' The average target price for Tencent stock is $90, roughly 41% above the current price of $64. In fiscal Q4 2025 (ended in March), Alibaba grew its sales by 7% year over year to $32.6 billion. A focus on operational efficiency allowed the e-commerce giant to increase adjusted EBITDA by 36% to $4.6 billion. Alibaba's AI and cloud computing initiatives are driving momentum. Alibaba Cloud achieved accelerated 18% revenue growth, powered by sustained triple-digit growth in AI-related products for the seventh consecutive quarter. Management highlighted the expansion of AI adoption beyond large enterprises to small and medium-sized businesses, with new customers migrating from traditional offline infrastructure to cloud-based AI services across various sectors, including manufacturing, financial services, and even animal farming. E-commerce operations showed strong user engagement, with Taobao and Tmall Group's customer management revenue growing 12% year-over-year, driven by improved monetization through the Quanzhantui advertising platform and new software service fees. The platform's premium 88VIP membership exceeded 50 million users, demonstrating growing customer loyalty and spending power. International expansion accelerated through Alibaba International Digital Commerce (AIDC), which achieved 22% revenue growth driven by robust cross-border business performance. It remains on track to achieve quarterly profitability in its international e-commerce operations. Alibaba strengthened its balance sheet by divesting non-core assets, generating $2.6 billion in cash proceeds. The company returned $16.5 billion to shareholders through $11.9 billion in share repurchases and $4.6 billion in dividends, including a 5% increase in annual dividends. With a strong $50.5 billion net cash position, Alibaba is well-positioned to capitalize on AI opportunities while maintaining its commitment to shareholder returns. Out of the 20 analysts covering BABA stock, 19 recommend 'Strong Buy' and one recommends 'Moderate Buy.' The average target price for BABA stock is $162, 44% above the current price. On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on