---
title: "In \"The Big Banks,\" Citigroup expects Baidu's core business EBIT to drop by 69% after adjustments last season, with revenue and profit expected to gradually improve starting this season"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/265062316.md"
description: "Citi expects Baidu's core revenue and adjusted EBIT for the third quarter to decrease by 7% and 69%, respectively, with revenues of RMB 24.6 billion and RMB 2 billion. The AI search transformation is expected to peak in the fourth quarter of 2025, at which point AI-related revenue will account for more than 40% of core revenue. Although the third quarter may be the worst quarter, revenue and profit are expected to gradually improve starting from the fourth quarter. Baidu plans to list primarily on the Hong Kong Stock Exchange and may begin paying dividends"
datetime: "2025-11-10T03:10:38.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/265062316.md)
  - [en](https://longbridge.com/en/news/265062316.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/265062316.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/265062316.md) | [繁體中文](https://longbridge.com/zh-HK/news/265062316.md)


# In "The Big Banks," Citigroup expects Baidu's core business EBIT to drop by 69% after adjustments last season, with revenue and profit expected to gradually improve starting this season

Citi's research report points out that Baidu-SW (09888.HK) may show weak performance in the third quarter due to the accelerated transformation to AI search, with its core total revenue and adjusted EBITDA expected to decrease by 7% and 69% year-on-year, reaching RMB 24.6 billion and RMB 2 billion, respectively. Online marketing revenue is expected to decrease by 20% year-on-year. As the AI search transformation peaks in the fourth quarter of 2025, AI-related revenue (cloud, AI agents, digital humans, robotaxis, and chips) will continue to grow, contributing over 40% of Baidu's core revenue, with revenue and profit expected to gradually improve starting from the fourth quarter of 2025.

Citi stated that due to the accelerated AI search transformation, its core online marketing revenue is expected to decrease by 20% year-on-year to RMB 15 billion in the third quarter of 2025; Baidu's cloud revenue is expected to grow by 20% year-on-year to RMB 5.9 billion.

Citi expects that Baidu's core revenue will see a year-on-year decline of 6% in the fourth quarter of 2025 (compared to a 7% decline in the third quarter), with online marketing revenue decreasing by 18% year-on-year. The decline in Baidu's core advertising revenue is expected to slow down starting in the fourth quarter of this year, as the AI search transformation nears completion, and through AI assistants and digital human live broadcasts, better monetization of AI search queries is anticipated, which should further increase revenue contribution.

The firm has lowered its adjusted net profit estimates for Baidu by 7.8% and 0.4% for 2025 and 2026, respectively, due to the accelerated AI search transformation. However, it believes that the third quarter of this year should be Baidu's worst quarter, and as the AI search transformation approaches its peak, revenue and profit are expected to improve starting from the fourth quarter of this year. AI-related revenue (cloud, AI agents, digital humans, autonomous vehicles, and chips) is expected to grow rapidly, contributing over 40% of Baidu's core revenue, and may even exceed 50% in 2026, helping to reassess the company's growth trajectory.

The firm estimates that the potential value of Baidu's AI business, combined with cash, is $65 billion, while its current market value is approximately $40 billion. Baidu plans to unlock value by applying for a primary listing on the Hong Kong Stock Exchange, aiming to meet the eligibility for inclusion in the Hong Kong Stock Connect as early as March 2026. The company may also begin paying dividends and could spin off new businesses, such as Apollo Go, which is rapidly expanding globally. The stock is currently trading at an adjusted price-to-earnings ratio of 13.6 times for the fiscal year 2026. Citi maintains a "Outperform" rating on Baidu (BIDU.US) ADR, with a target price of $160

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