What Bears Saw Before Baidu Slid

If Baidu looked like a pure AI and robotaxi opportunity at the start of 2026, the return since then has been harsh. Investors who held Baidu from the start of the year are down 46.9%, including dividends. If you had bought in on the idea that ERNIE, AI Cloud and Apollo Go could offset a shrinking ad business and justify higher future P/E multiples, which specific assumptions about revenue mix, margins or AI monetization now look too optimistic rather than simply early?

Baidu is not the only name tied to this theme. Zero in on 53 AI infrastructure stocks and compare how each one is priced.

The Two Stories Investors Were Weighing On Baidu

The shares cost US$131 at the start of the period, and buyers were really choosing between two very different stories about what Baidu could become.

On the optimistic side, the bullish May 2025 view saw a Fair Value of US$146, a notional price based on ERNIE, AI Cloud and Apollo Go eventually driving revenue compounding with a future P/E assumption of 18.5x on 2028 earnings.

The more cautious December 2025 bear case put Fair Value at US$118, built on slower 4.0% assumed annual revenue growth and profit margins settling nearer 14.8% rather than holding near prior levels.

What The Results Changed For The Baidu AI Story

Baidu’s Q2 2026 report showed AI powered units making up 50% of core activity, with AI cloud and GPU cloud lines growing and Apollo Go expanding into Europe. That helped the optimistic case that new engines could reshape the mix. In the same quarter, total revenue slipped 4% year on year and net margin dropped from 21.1% to 5.8%, which clearly reinforced the cautious view on earnings power.

The key hinge was not AI adoption itself but whether it could support profit. For any other stock built on an AI pivot, track how fast AI related turnover rises versus the direction of overall net margin in each set of reported numbers.

What You Are Paying For In Baidu Today

With Baidu at US$79.76 from the start of the year, the share price is down 46.9%. The analyst consensus Narrative on Simply Wall St still places its Fair Value above that level, based on a view that the AI focused businesses can carry more of the load over time.

The Narrative centers on Baidu turning ERNIE, AI Cloud, GPU Cloud and Apollo Go into profit engines that outweigh weaker advertising and heavier AI spend. A buyer today would need to believe Baidu can convert its current AI position into durable, profitable revenue across these units.

"The main thing that has to go right is that Baidu converts its AI leadership in cloud infrastructure, search monetisation and Apollo Go into sustained, profitable revenue that more than offsets pressure on traditional online marketing and higher AI investment."

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for

Looking One Step Beyond Baidu

Baidu shows how AI can reshape ads, search and cloud. You could also look sideways at another heavyweight building similar tools.

That business uses AI to rework search results, office software and video platforms. It weaves new models directly into places users already spend time.

It also sells AI heavy cloud services, helping enterprises run complex workloads and manage data. Clients get infrastructure, security and analytics tied closely to those models.

If you want broader AI exposure than Baidu alone, that kind of ecosystem might matter. The open question is how valuable that role becomes as adoption shifts.

That argument has a Narrative and a number behind it. → See the company one Narrative values 48% above its price

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com