Baidu (BIDU.US) released its second quarter 2026 results, reporting revenue of 31.3 billion yuan. Revenue from artificial intelligence (AI)-based businesses amounted to 12.5 billion yuan, representing a 25% increase. This figure constitutes 50% of the company's total revenue for the second consecutive quarter, following Q1 where AI accounted for 52%.
Since 2023, Baidu has been utilizing large models to update its search engine, Wenku, and Netdisk. The company provides these models and applications through Baidu AI Cloud, separately disclosing information on AI cloud service infrastructure, AI applications, and AI-focused marketing starting in 2025. Throughout 2025, AI revenue reached 40 billion yuan, showing a 48% growth, with the AI share increasing from 26% in 2024 to 39%, surpassing the 50% mark in the first quarter of 2026.
The first area to demonstrate scaling was AI infrastructure. AI cloud infrastructure revenue reached 7.3 billion yuan in the second quarter, which is 50% higher compared to the previous period. Furthermore, revenue from GPU-powered cloud services grew by 283%, accelerating compared to the 184% growth in the first quarter. Baidu AI Cloud has expanded its presence in the finance, automotive, energy, and other sectors.
Regarding applications, AI application revenue in the second quarter was 2.5 billion yuan, demonstrating a 3% growth. Baidu upgraded Wenku and Netdisk and launched products such as Baidu Dazi, Miaoda, Famou, and Yijing in office solutions, application development, and digital human domains. In June, the daily penetration of AI features in Wenku and Netdisk increased by 27.4 percentage points, and the Monthly Active Users (MAU) for the Kuku AI office solution exceeded 25 million.
The Apollo Go system facilitates large-scale AI deployment in the physical world, covering 28 cities with a cumulative autonomous driving mileage exceeding 350 million kilometers. Testing is also advancing in Hong Kong, London, Switzerland, and Dubai. The AI office solution has begun showing initial signs of growth: Baidu released the enterprise version of Dazi and updated GenFlow, renaming it Kuku AI. Dazi's growth ranked first in the industry, and the AI office solution has become a key battleground for AI revenue growth in BAT.
Baidu is also actively moving up the value chain. Since introducing the Kunlun chip in 2018, the company has transitioned from serving its own computing needs to providing services to external clients. Since 2025, the Kunlun chip has supplied several P800 clusters of 10,000 cards to internet companies, financial institutions, the energy sector, and manufacturing. These chips are adapted for models such as ERNIE, DeepSeek, GLM, and MiniMax. In January, Baidu announced plans to list the Kunlun Chip in Hong Kong.
Baidu's AI business forms a longer value chain: the Kunlun Chip is at the base, Baidu AI Cloud and ERNIE are in the middle, and various agents and applications are at the top. Investment movements were noted in the earnings reports: according to Form 13F filings, Stanley Druckenmiller of Duquesne Family Office acquired a position of 88,000 ADR in the second quarter, marking his return to Chinese stocks after exiting Alibaba in the fourth quarter of 2023. Additionally, David Tepper's Appaloosa added over 600,000 shares. Jefferies views Baidu's voluntary transition from secondary to dual primary listing in Hong Kong as a positive signal for inclusion in Stock Connect in September. Baidu's AI story is transforming from an investment phase to a focused harvesting phase, as metrics become concrete: this includes cloud revenue, application user numbers, volume of external chip sales, and cities where autonomous driving is deployed.
