In-depth Analysis of Revenue Growth Rate Competitiveness of Baidu AI Cloud Business

According to the latest financial report data, Baidu AI Cloud business showed strong growth momentum in 2025. In Q3 2025, Baidu AI Cloud revenue reached 4.2 billion yuan, a year-on-year increase of 33%, among which the subscription revenue of AI high-performance computing infrastructure increased by 128% year-on-year, indicating high demand from enterprise customers for Baidu’s AI computing power services [1][2]. Notably, Baidu disclosed the revenue composition of its AI business in detail for the first time in its financial report: AI application revenue reached 2.6 billion yuan, and AI native marketing service revenue increased by 262% year-on-year to 2.8 billion yuan, marking a key turning point for Baidu’s AI business from the investment period to the real growth contribution period [1][2].

From the perspective of business structure, Baidu AI Cloud business includes three core segments: intelligent cloud services (IaaS+PaaS+MaaS), AI application products, and AI native marketing services. In the intelligent cloud field, the daily average API call volume of Baidu Wenxin Big Model reached 1.65 billion times in December 2024, and the external API call volume increased by 178% month-on-month, which fully reflects the rapid increase in enterprises’ recognition of Wenxin Big Model’s value and the rise in adoption rate due to the decline in reasoning costs [3]. At the AI application level, the monthly active users of Baidu Library’s AI functions reached 94 million in December 2024, doubling month-on-month, making it one of the AI products with the largest number of paid users globally [3].

From the perspective of financial indicators, Baidu’s current market capitalization is 50.97 billion US dollars, with a price-earnings ratio (TTM) of 12.61 times and a price-to-book ratio of 1.28 times, which is in a reasonable range relative to its AI business potential [4]. The company’s Q3 2025 revenue reached 438 million US dollars, with EPS of 1.56 US dollars, exceeding market expectations by 30% [4]. The proportion of non-advertising business revenue continued to rise: in the first half of 2025, the revenue of new AI businesses including intelligent cloud services reached 19.4 billion yuan, a year-on-year increase of 36%, ranking first among listed cloud vendors in terms of growth rate [5].

According to data from Zhongshang Industry Research Institute, China’s cloud computing market shows obvious head concentration characteristics. Alibaba Cloud ranks first with a 36% market share, Huawei Cloud ranks second with 19%, Tencent Cloud ranks third with 16%, and Baidu Intelligent Cloud ranks fourth with a 9% market share [5][6]. In terms of overall scale, Baidu’s scale in the traditional cloud computing field has a large gap with Alibaba Cloud and Huawei Cloud, mainly because Baidu failed to build a super application ecosystem in the mobile Internet era, while Alibaba Cloud and Tencent Cloud locked in a large number of customers relying on their respective ecosystem advantages [5].

However, after the full arrival of the AI era, the competitive landscape is undergoing profound changes. AI has pressed the accelerator button for cloud computing, and major cloud vendors have stood on a new starting line with AI as the core, and the competition in technical routes, ecosystem construction, and industry penetration is becoming increasingly fierce [5]. For Baidu, this is no longer a passive follow-up defensive battle, but a ‘strategic counterattack’ with full investment [5].

In the more strategically significant full-stack AI cloud service market, Baidu’s performance is significantly better than the traditional cloud market. According to the Frost & Sullivan report, the scale of China’s full-stack AI cloud service market reached 25.9 billion yuan in the first half of 2025. Alibaba Cloud ranks first with a 30.2% market share, Baidu Intelligent Cloud ranks second with 22.5% market share, and the combined share of the two exceeds 50% [5][6]. This data shows that Baidu has established obvious competitive advantages in the full-stack AI cloud service field, forming the prototype of a ‘duopoly’ pattern with Alibaba Cloud.

In specific sub-fields, Baidu Intelligent Cloud ranks first in both government big model platforms and enterprise solutions, covering 65% of central enterprises, 100% of systemically important banks, and more than 800 financial institutions [1][2]. In addition, Baidu has won the top 10 mobile phone manufacturers, top 15 auto brands, and top 10 new energy vehicle companies, and its penetration rate in the embodied intelligence industry also ranks first [1][2]. These data indicate that Baidu has established deep customer relationships and competitive barriers in the government-enterprise market and high-tech barrier industries.

From the perspective of the emerging indicator of public cloud call volume of big models, the market pattern shows new characteristics. According to the IDC report “China Big Model Public Cloud Service Market Analysis, 2025H1”, the public cloud call volume of big models in China reached 536.7 trillion Tokens in the first half of 2025 (statistical caliber: the call volume of public cloud services for big models provided by major cloud vendors to external customers, excluding self-owned business calls). Among them, Volcano Engine (ByteDance) ranks first in the Chinese market with a 49.2% market share, Alibaba Cloud and Baidu Intelligent Cloud account for 27% and 17% respectively, ranking second and third [7].

Although Volcano Engine is temporarily leading in big model call volume, it should be noted that this statistical caliber focuses on the MaaS (Model as a Service) level. From the comprehensive caliber of ‘IaaS+PaaS+MaaS’ full-chain revenue, Alibaba Cloud ranks first with 35.8% share, and Volcano Engine ranks second with 14.8% [7]. This shows that after the big model boom, the market is returning to competition in comprehensive cloud service capabilities, and Baidu is expected to maintain competitiveness in this dimension relying on its long-term accumulation in the AI field.

Baidu’s full-stack technical capability in the AI field is its core competitive advantage. Baidu is one of the few AI companies in the world with a complete four-layer architecture from chips (Kunlunxin), frameworks (PaddlePaddle), models (Wenxin Big Model) to applications [1][2]. This end-to-end technical integration capability enables Baidu to form differentiated advantages in model training efficiency, reasoning cost, and user experience. In December 2024, the daily average API call volume processed by Wenxin Big Model reached 1.65 billion times, and the external API call volume increased by 178% month-on-month. This data not only reflects the strong market demand but also proves the stability and reliability of Baidu’s technology stack [3].

Baidu’s layout in the AI chip field is also worthy of attention. Kunlunxin, as Baidu’s self-developed AI chip, has obtained orders worth 1 billion yuan from large customers such as China Mobile in 2024 [8]. In January 2026, Baidu announced plans to spin off Kunlunxin subsidiary for listing on the Hong Kong Stock Exchange. This move will help independently display the value of Kunlunxin, attract investors focused on the AI chip field, and broaden financing channels [8][9]. The independent development of the chip business will further enhance the supply chain autonomy and cost competitiveness of Baidu’s AI cloud business.

Baidu’s deep penetration in the government-enterprise market is another important advantage. Relying on technical accumulation under the policy environment of localization substitution and independent controllability, Baidu Intelligent Cloud has occupied a first-mover advantage in fields such as government big models and digital transformation of central enterprises [1][2]. Data shows that Baidu Intelligent Cloud customers cover 65% of central enterprises, 100% of systemically important banks, and more than 800 financial institutions. These customers have the characteristics of high stickiness, high value, and long cycle, providing Baidu with a stable revenue base.

In the financial industry, Baidu has achieved full coverage of the top 10 mobile phone manufacturers, top 15 auto brands, and top 10 new energy vehicle companies. Cooperation with these head customers not only brings direct revenue but also forms an industry benchmark effect, which helps expand to small and medium-sized customers [1][2]. In addition, Baidu’s penetration rate in the embodied intelligence (robots, AI hardware, etc.) industry also ranks first, which occupies a strategic position in advance for the outbreak of the future intelligent terminal market [1][2].

Baidu continues to break through in AI native product innovation, forming diversified revenue sources. AI application revenue reached 2.6 billion yuan, covering flagship products such as Baidu Library, Baidu Netdisk, and digital employees [1][2]. GenFlow, a full-end general agent jointly launched by Baidu Library and Baidu Netdisk, has been upgraded to version 3.0 with more than 20 million active users [1][2]. The no-code development tool ‘Miaoda’ has evolved to version 2.0, and has developed more than 400,000 AI applications through no-code, reducing the threshold for enterprises to adopt AI technology [1][2].

The explosive growth of AI native marketing service revenue (a year-on-year increase of 262% to 2.8 billion yuan) shows the empowerment effect of AI on Baidu’s traditional advertising business [1][2]. AI native advertising realizes automatic delivery and content generation, and AI search evolves from simple answer display to conversational tasks and rich media completion, which redefines the value creation method of search advertising [2]. As the proportion of AI-generated content in search results continues to increase (reaching 22% in Q4 2024), Baidu’s advertising business is expected to achieve structural improvement under AI empowerment [3].

Although Baidu has leading advantages in AI technical capabilities, its ecosystem shortcomings are still key factors restricting business scale expansion. Alibaba Cloud and Tencent Cloud have locked in a large number of customers relying on their respective e-commerce and social ecosystems, forming strong network effects and customer stickiness [5]. Huawei Cloud has risen rapidly relying on deep accumulation in the government-enterprise market and ‘cloud + end’ collaboration capabilities [5]. In contrast, Baidu failed to build a super application ecosystem in the mobile Internet era, leading to relatively high customer acquisition costs in the cloud service market.

The challenge facing Baidu Intelligent Cloud is how to combine the ‘edge of technology’ with industrial thickness, channel breadth, and ecological viscosity [5]. The competition of AI cloud is based on a huge cloud computing base. Alibaba Cloud’s long-term leading share in the IaaS market means it has a wider customer base to upsell AI capabilities [5]. Many enterprises naturally choose its Bailian model platform because they use Alibaba’s basic cloud services. This ‘cloud + AI’ synergy effect is what Baidu needs to focus on building [5].

Volcano Engine under ByteDance is becoming an emerging competitor of Baidu’s AI cloud business. According to IDC data, Volcano Engine has ranked first in the Chinese market with a 49.2% market share in big model public cloud call volume, and also ranks second with 14.8% in the ‘IaaS+PaaS+MaaS’ caliber [7]. The rise of Volcano Engine has broken the original competitive pattern of the AI cloud market. Relying on ByteDance’s technical accumulation in recommendation algorithms and content distribution, as well as the traffic advantages of super applications such as Douyin, it is rapidly eroding the market share of traditional cloud vendors.

The rapid rise of operator cloud service providers is also worthy of attention. China Telecom Cloud, China Mobile Cloud, and China Unicom Cloud occupy important positions in the cloud computing market relying on network infrastructure advantages and policy support [6]. Mid-tier vendors try to break the pattern in segmented markets by deepening vertical industry AI cloud and focusing on high-performance computing scenarios improved by AI [6]. This multi-polar competitive pattern means that Baidu needs to maintain technical leadership while accelerating ecosystem construction and market expansion.

The external environment and policy risks faced by Baidu cannot be ignored. The U.S. Department of Commerce included Baidu in the ‘China Military Company’ list (CMC list) in 2025. Although this is different from being included in the entity list, it may restrict U.S. investors from investing in Baidu [10]. In addition, Baidu’s AI chip business may be affected by potential semiconductor export controls. Although Kunlunxin uses domestic foundries, it still needs to pay attention to changes in the difficulty of obtaining advanced processes.

From the macro environment perspective, the uncertainty of Sino-US tech competition may affect Baidu’s internationalization strategy and high-end chip acquisition capabilities. At the same time, the progress of domestic economic recovery will also affect enterprise customers’ IT expenditure willingness and AI application landing progress [3]. These external factors form a complex interaction with Baidu’s own business development and need continuous tracking and evaluation.

In the short term, the growth momentum of Baidu’s AI cloud business mainly comes from the following aspects. First, the popularization of open-source models such as DEEPSEEK will accelerate the landing of domestic AI applications and increase the demand for Baidu’s cloud business from enterprise customers and developers [3]. Second, Baidu plans to open-source the Wenxin Big Model 4.5 series and provide Wenxin Yiyan to end users for free, which will significantly improve the awareness of enterprises and users [3]. Third, the introduction of more economic policies is expected to promote the recovery of enterprise IT expenditure and bring incremental demand to the cloud service market [3].

In addition, Baidu’s plan to spin off Kunlunxin for listing will not only release the independent value of the subsidiary but also provide more stable computing power supply and cost advantages for Baidu’s AI cloud business [8][9]. The continuous optimism of the capital market about Baidu’s artificial intelligence and autonomous driving fields also provides sufficient financial support for the company’s strategic investment [5].

In the mid-to-long term, Baidu’s AI cloud business has significant growth potential. According to IDC’s forecast, China’s intelligent computing power scale will reach 1037.3 EFLOPS in 2025, an increase of 43% compared with 2024 [6]. With the in-depth penetration of AI big models in various industries, the demand for AI cloud services from enterprises will show a continuous growth trend. Relying on its full-stack AI capabilities and deep layout in the government-enterprise market, Baidu is expected to fully benefit from this structural opportunity.

At the AI application level, the success of Baidu Library’s AI transformation provides a replicable path for the AI transformation of other products. As more AI native products enter the commercialization stage, Baidu’s AI application revenue is expected to continue to maintain rapid growth [1][2]. The continuous expansion of the Apollo Go autonomous driving business will also open up new growth space for Baidu in the intelligent travel field [3].

Looking forward, the competitive landscape of China’s AI cloud market is expected to show the following characteristics: Alibaba Cloud will continue to lead with comprehensive strength, but will compete with Baidu in the full-stack AI cloud service field; Volcano Engine is expected to maintain a strong position in specific segmented fields relying on its advantages in recommendation algorithms and content ecology; Huawei Cloud will continue to deepen in the government-enterprise market and compete directly with Baidu; operator cloud service providers will seek breakthroughs in edge computing and hybrid cloud fields relying on network infrastructure advantages.

In this competitive landscape, Baidu needs to continue to strengthen the technical leading advantage of its full-stack AI capabilities, while accelerating ecosystem construction and channel expansion, transforming technical advantages into market share and revenue growth. Its deep layout in the government-enterprise market and forward-looking layout in emerging fields such as embodied intelligence are expected to provide it with differentiated competitiveness in the next stage of competition.

From the valuation perspective, Baidu’s current price-earnings ratio (TTM) is 12.61 times, lower than most technology companies, reflecting the market’s concerns about Baidu’s traditional search business and uncertainty about the monetization rhythm of its AI business [4]. However, as the proportion of AI business revenue continues to rise (already close to 40% of core revenue), Baidu’s valuation system is expected to be reshaped [2].

Analysts are optimistic about Baidu. According to Bloomberg data, 38 analysts gave a ‘Buy’ rating (accounting for 74.5%), 13 gave a ‘Hold’ rating, and the average target price is 160 US dollars, with an upside potential of 6.5% compared to the current stock price [4]. JPMorgan upgraded Baidu’s rating to ‘Overweight’ in November 2025, and Jefferies maintained a ‘Buy’ rating in January 2026, which reflects the recognition of professional institutions for Baidu’s AI strategy [4].

Main business competition risk (search business faces competition from ByteDance, etc.), technology development not meeting expectations, economic recovery not meeting expectations, and geopolitical-related risks [3].

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[1] AI业务增长超50%，百度重夺战略主动权 - OFweek

[2] AI业务增长超50%，百度重夺战略主动权 - 维科号

[3] 2024Q4业绩点评：看好2025年云业务加速增长 - 东方财富网

[4] 金灵API数据 - 公司概况与财务分析

[5] AI云计算时代，百度智能云终于不再被腾讯云、华为云压着？ - OFweek

[6] 2025年中国云计算行业分布情况 - 腾讯云

[7] AI云"双榜"发布勾勒中国大模型新格局：阿里云营收领先，火山引擎以… - 澎湃新闻

[8] Baidu (BIDU) Skyrockets 20% as Chip Unit Eyes IPO in HK - Insider Monkey

[9] Baidu to Spin Off AI Chip Unit Kunlunxin Amidst Growing Demand - GuruFocus

[10] Baidu Faces Legal Scrutiny Following Pentagon Designation—What Should Investors Know? - Market Chameleon