Baidu CFO says AI margins approach search-level profitability

Baidu ↗ 3.01% CFO Henry He said the company's AI business margins are on track to match those of its legacy search and advertising operations in the near term, as the Chinese tech giant's artificial intelligence revenue now accounts for more than half of total sales.

Speaking to Bloomberg Television on Tuesday, He said that the profit margin on Baidu's AI revenue could reach parity with its search business given stronger demand for cloud services and domestically produced chips. He added that investments in new GPU clusters hosting AI services could fully pay for themselves in two to three years, down from a prior estimate of five to six years. "Our cloud revenue will be at a good level of increasing — and at least faster than industry average in the next few quarters — and our capex spending will be lower than the market's expectation," He said. "So a smarter way, less spending, higher growth."benzinga+3

AI Revenue Surges as Search Declines

Baidu's second-quarter 2026 earnings, reported in August, showed the company's core AI-powered business generated RMB 12.5 billion, accounting for 50% of overall revenue and growing 25% year over year. AI cloud infrastructure revenue hit RMB 7.3 billion, up 50% from a year earlier, while GPU cloud services grew 283%. Traditional online marketing revenue, however, fell 19% as users increasingly turned to AI chatbots like ByteDance's Doubao. Total revenue declined 4% year over year to RMB 31.3 billion.startupfortune+2

Dual-Primary Listing and Kunlunxin IPO

Baidu's conversion to a dual-primary listing on the Hong Kong Stock Exchange took effect on Tuesday, giving the company primary listing status on both HKEX and Nasdaq. The move could open the door to inclusion in Stock Connect, which would allow mainland Chinese investors to buy Baidu shares directly.webull+2

He has also been leading plans for an independent listing of Baidu's AI chip unit Kunlunxin, which Reuters reported in June was targeting a $50 billion valuation for a Hong Kong IPO. The CFO said he is considering capital market options for several other Baidu assets but declined to specify.benzinga+1

Baidu faces stiff competition from Alibaba ↗ 1.28%, Tencent, and ByteDance in China's AI race, with its Ernie models falling behind open-weight rivals. Founder Robin Li is betting that the competitive landscape will shift toward AI agents and applications — a transition that could drive further growth in Baidu's cloud business.benzinga