On August 19, shares of Baidu (09888.HK) opened more than 12% lower in Hong Kong, trading at HK$88.55, marking the lowest level since September last year, with a cumulative decline of over 32% for the year.
Overnight, Baidu's US-listed shares (BIDU) also suffered a sharp drop of 12.73%, closing at $90.87, hitting a near one-year low not seen since August 2025, bringing the year-to-date loss to 30.45%.
On the news front, Baidu released its second-quarter 2026 earnings report after the market closed on August 18. The data revealed that total revenue for the quarter stood at RMB 31.3 billion, down 2% quarter-over-quarter and 4% year-over-year, slightly missing the market's expectation of RMB 31.59 billion. This marks the fifth consecutive quarter of year-over-year revenue decline.
The net profit attributable to Baidu was RMB 2.3 billion, a significant drop of approximately 68% compared to RMB 7.3 billion in the same period last year. Adjusted net profit came in at RMB 2.573 billion, also falling short of market expectations.
Looking at the business structure, Baidu's traditional advertising business continues to face pressure, with online marketing services revenue declining 19% year-over-year to RMB 13.1 billion. Revenue from core AI new businesses reached RMB 12.5 billion, accounting for 50% of general business revenue, maintaining a majority share for the second consecutive quarter. Among these, GPU cloud revenue surged 283% year-over-year, standing out as one of the few bright spots in the earnings report.
Following the earnings release, several major investment banks lowered their price targets for Baidu. Jefferies reduced its target from HK$170 to HK$163, Deutsche Bank cut its from HK$186 to HK$162, and UBS trimmed its from HK$165 to HK$155, with all maintaining "Buy" ratings.
Analysts suggest that market focus has shifted from whether Baidu possesses AI products to whether AI revenue can accelerate monetization and reverse the trend of five consecutive quarters of revenue decline. As of the end of the quarter, Baidu's total cash and investments reached RMB 283.1 billion. The company is advancing its dual primary listing conversion in Hong Kong, which is expected to take effect within the year.
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