50% YoY increase in revenue from AI sounds good… or is it not?
Baidu reported that its AI-powered businesses grew over 50% year-on-year, reaching about RMB 10B this quarter. That sounds impressive, and it shows that AI is becoming a bigger part of Baidu’s business — roughly one-third of total revenue now.
But here’s the catch: Baidu’s free cash flow was –RMB 4.7B earlier this year, and the company clearly said this was “primarily due to increased investment in AI.” This means the AI growth isn’t free — Baidu is spending heavily on servers, GPUs, and data centres. In other words, revenue is rising, but cash is still flowing out faster than it’s coming in.
When you compare the ~RMB 3.4B increase in AI revenue to the estimated RMB 20–35B Baidu is likely spending on AI infrastructure, the short-term ROI doesn’t look great yet. The long-term potential is there, but for now, the AI business is growing fast but burning cash, so investors should view this as a long game, not an immediate margin booster.
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