Why Baidu Stock Wilted on Wednesday: The Tech Giant’s Midweek Meltdown Explained
Baidu shares took a nosedive midweek—here's what rattled investors.
Market jitters hit China's search titan hard. Wednesday's trading session saw Baidu's stock bleeding value while broader indices held relatively steady. The divergence screamed company-specific troubles rather than sector-wide contagion.
Regulatory shadows loom large. Beijing's latest tech crackdown whispers spooked traders—again. Baidu's AI ambitions face mounting scrutiny as authorities tighten grip on data handling and algorithm transparency.
Advertising revenue concerns resurface. Core search business shows cracks as competitors chip away at market share. Mobile ecosystem growth slows while user engagement metrics disappoint analysts expecting stronger traction.
Autonomous driving division burns cash without clear monetization. Apollo unit continues draining resources while commercial deployment timelines stretch further into the future. Investors lose patience with moonshot projects eating into bottom lines.
Wednesday's wipeout serves another reminder—even tech giants aren't immune to market gravity. Traditional equity investors still panic at the first sign of regulatory turbulence, proving some things never change in finance's endless cycle of irrational exuberance and sudden sobriety.
Top- and bottom-line slides
Baidu's second-quarter results, published well before market open that day, revealed that the company's revenue slumped by 4% year over year to 32.7 billion yuan ($4.55 billion). That was slightly below the consensus analyst estimate of 32.9 billion yuan ($4.58 billion).
Image source: Getty Images.
The decline and miss might have been more pronounced had it not been for the company's artificial intelligence (AI)-boosted offerings. Baidu quoted CEO Robin Li as saying that its AI Cloud business "continued to deliver robust and healthy revenue growth, supported by our strengthening full-stack AI capabilities and comprehensive end-to-end AI products and solutions."
It didn't help push the bottom line higher, however, as non-GAAP (adjusted) net income fell by 35% to just under 4.8 billion yuan ($668 million). On a per-ADS basis, the company's profitability was 13.58 yuan ($1.89). On the bright side, this was a bit higher than the average analyst estimate of 13.33 yuan ($1.86) per ADS.
Motoring into a better future?
In its earnings release, Baidu pointed to AI as a potential engine of growth. On the subject of engines, it also clearly has high hopes for the robotaxis coming from its mobility unit, Apollo Go. It said that it is a leading company in robotaxi markets with both left- and right-hand drive regimes.
