Is Baidu’s In‑House AI Chip Push Reshaping The Investment Case For Baidu (BIDU)?

• Baidu recently stepped up its AI ambitions by pushing forward with in-house, energy-efficient, high-performance AI chips aimed at competing more directly with Nvidia and strengthening its role across AI-enabled industries.
• This shift toward proprietary AI hardware could deepen Baidu’s control over its technology stack, potentially improving performance, cost efficiency, and the appeal of its broader AI ecosystem.
• We’ll now examine how Baidu’s push into proprietary AI chips could reshape its AI-led earnings narrative and longer-term growth profile.

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Baidu Investment Narrative Recap

Baidu’s investment case still rests on confidence that its AI ecosystem can offset volatility in core online marketing and deliver higher quality, more diversified earnings over time. The move into in-house AI chips speaks directly to that thesis, but does not yet change the key near term catalyst, which remains clearer monetization of AI search, or the biggest risk, that heavy AI and cloud spending continues to depress margins without sufficient payback.

Among recent announcements, Baidu’s Q3 2025 results, which showed revenue of CNY 31,174 million and a net loss of CNY 11,232 million driven by a large one off charge, feel most relevant here. The chip push now sits against a backdrop of pressured profitability and negative free cash flow, sharpening the question of whether Baidu’s AI infrastructure bets, including proprietary hardware, can eventually translate into more resilient earnings and stronger returns on the capital already deployed.

Yet behind Baidu’s ambitious AI chip story, investors should also be aware of the risk that prolonged weak monetization and rising costs could...

Read the full narrative on Baidu (it's free!)

Baidu's narrative projects CN¥150.8 billion in revenue and CN¥22.3 billion in earnings by 2028. This requires 4.0% yearly revenue growth and an earnings decrease of CN¥3.1 billion from CN¥25.4 billion today.

Uncover how Baidu's forecasts yield a $151.62 fair value, a 28% upside to its current price.

Exploring Other Perspectives

Fourteen fair value estimates from the Simply Wall St Community span roughly CNY 71 to CNY 152, illustrating how far apart individual views on Baidu sit. When you weigh those against Baidu’s still early AI search monetization efforts and margin pressure, it becomes even more important to compare multiple perspectives on what could drive the company’s next phase of performance.

Explore 14 other fair value estimates on Baidu - why the stock might be worth 40% less than the current price!

Build Your Own Baidu Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Baidu research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Baidu research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Baidu's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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