Should Baidu’s (BIDU) Buyback and Rising Earnings Point to a Stronger Investment Case?

• In the past quarter, Baidu, Inc. repurchased 7,706,146 shares for US$677 million and reported second quarter 2025 earnings showing net income of CNY 7,322 million and diluted EPS of CNY 20.32, despite revenue declining slightly year-over-year to CNY 32,713 million.
• This combination of buyback completion and robust growth in net income and earnings per share reflects improved operational efficiency and sustained confidence in Baidu's long-term business outlook.
• We'll examine the implications of Baidu's earnings growth and share repurchase on its investment narrative and future earnings potential.

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Baidu Investment Narrative Recap

To be a Baidu shareholder, you need to believe in Baidu’s ability to transform China’s digital economy through AI innovation amid softening core ad revenues and margin pressures. While the latest share buyback and earnings growth may reinforce confidence and bolster the company’s near-term investment case, neither materially alters concerns around slower advertising monetization or the pressure from rising operational costs, the risk of margin compression still stands out as the key short-term issue to watch.

The completion of Baidu’s share buyback program, repurchasing 22,655,503 shares for US$2,231 million, comes on the heels of stronger earnings, highlighting management’s focus on shareholder value even as revenue growth softens. This move offers some support for earnings per share and may offset short-term share price volatility, but it does not directly resolve underlying profitability or monetization risks for investors focused on upcoming catalysts.

On the other hand, investors should be aware that despite operational improvements, Baidu still faces significant risks if AI monetization...

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

Baidu's outlook suggests revenues of CN¥150.8 billion and earnings of CN¥22.3 billion by 2028. This implies a 4.0% annual revenue growth, but a decrease in earnings of CN¥3.1 billion from the current CN¥25.4 billion.

Uncover how Baidu's forecasts yield a $99.59 fair value, a 5% upside to its current price.

Exploring Other Perspectives

Sixteen members of the Simply Wall St Community pegged Baidu’s fair value between US$71.47 and US$153.41 per share. While many see upside, this broad spread of opinions reflects ongoing uncertainty about the pace and profitability of Baidu’s AI initiatives, encouraging you to compare several viewpoints before making an investment decision.

Explore 16 other fair value estimates on Baidu - why the stock might be worth as much as 61% more 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 3 key rewards and 1 important warning sign 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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