Baidu.com (BIDU US & 9888 HK) First Take: 1Q26 - Past the 50% line: From search with an AI option to AI with a legacy tail

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Baidu.com (BIDU US & 9888 HK) First Take: 1Q26 - Past the 50% line: From search with an AI option to AI with a legacy tail

Asia Pacific Equity Research

19 May 2026

Baidu.com (BIDU US & 9888 HK)

First Take: 1Q26 - Past the 50% line: From search

with an AI option to AI with a legacy tail

Our First Take: We are positive on Baidu into the 1Q26 conference call. Head of China Equity Research

The more analytically significant development from this print is structural and Co-Head of Asia TMT

rather than directional: the Core AI-powered Business crossed 50% of Research

Baidu General Business for the first time at 52% (vs. 36% in 1Q25, 43% Alex Yao AC

in 4Q25) on +49% YoY growth, re-anchoring the equity story from a (86 21) 6106 6505

alex.yao@jpmorgan.com

search business with an AI option to an AI business with a legacy tail. SAC Registration Number: S1730523020001

Two read-throughs follow. First, demand-side acceleration is being Daniel Chen

matched with supply commitment: AI Cloud Infra grew +79% YoY to (86-21) 6106 6205

Rmb8.8bn, with the GPU Cloud sub-line (compute rental rather than daniel.q.chen@jpmorgan.com

Kunlunxin chip sell-through) accelerating to +184%, capex stepping up to SAC Registration Number: S1730521040001

Rmb5.84bn (3x both 1Q25 and 4Q25), and FCF turning negative Nancy Liu

Rmb3.4bn ex-iQIYI. Second, margin durability is the variant perception (86 21) 6106 6343

nancy.liu@jpmorgan.com

worth holding: Baidu General Business non-GAAP OP of Rmb3.95bn SAC Registration Number: S1730524090001

(+39% QoQ), group non-GAAP OP beat consensus by ~9%, and R&D at J.P. Morgan Securities (China) Company

Rmb4.38bn ran slightly below 1Q25, directly contradicting the 2026-as- Limited

reinvestment-year framing in which prior depreciation savings were BIDU, BIDU US