Pomerantz LLP has joined the expanding legal scrutiny on Baidu, Inc. (NASDAQ: BIDU), investigating possible securities fraud claims on behalf of investors. This adds to ongoing probes by Glancy Prongay, Howard G. Smith, and Frank R. Cruz firms.

The investigation follows significant market volatility linked to regulatory actions and financial performance. On November 26, 2025, Reuters reported that Deputy Defense Secretary Stephen Feinberg informed lawmakers on October 7 that the Pentagon had added Baidu to a list of companies aiding the Chinese military. Baidu’s American Depositary Share price fell $1.54, or 1.3%, to close at $116.34 on that date.

Regulatory and Financial Context

Subsequent financial results have shown declining revenues:

For the full year 2025, Baidu reported total revenues of RMB 129.1 billion ($18.46 billion), a 3% year-over-year decrease. Management attributed this primarily to a decrease in Legacy Business, partially offset by an increase in Baidu Core AI-powered Business. Despite this decline, management stated that results demonstrate AI’s growing contribution to value creation and the ability to translate AI capabilities into scalable commercial impact. On February 26, 2026, shares fell $7.50 or 5.65% to close at $125.15.

In the second quarter of 2026, revenue fell further to RMB 31.3 billion ($4.62 billion), a 4% year-over-year decline. Management explained that the company is "deliberately holding back on monetizing the AI search," which has weighed on advertising businesses in the near term. The company also noted that competition in the industry remains very intense and that competition for users’ time and attention has intensified further. On August 18, 2026, shares fell $13.25 or 12.73% to close at $90.87.

What the Numbers Show

The data reveals a divergence between management’s narrative on AI-driven value creation and actual top-line performance. While management highlighted the growing contribution of AI-powered business, total revenues contracted in both FY25 (-3%) and Q2 2026 (-4%). This suggests that growth in the AI segment has not yet been sufficient to offset declines in legacy operations, resulting in overall degrowth despite strategic pivots.

Contact Information

Investors who purchased Baidu, Inc. securities and wish to learn more about these claims may contact Pomerantz LLP. Danielle Peyton can be reached at 646-581-9980, ext. 7980 or via email at dpeyton@pomlaw.com .

Alternatively, investors may contact The Law Offices of Frank R. Cruz at 310-914-5007 or visit www.frankcruzlaw.com . Email inquiries should include mailing address, telephone number, and number of shares purchased.

Investors may also contact the Law Offices of Howard G. Smith at (215) 638-4847 or via email at howardsmith@howardsmithlaw.com . The firm is located at 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020. Visit www.howardsmithlaw.com for more information.

Investors may also contact Glancy Prongay Wolke & Rotter LLP. Charles Linehan, Esq., can be reached at 310-201-9150 or toll-free at 888-773-9224. Email inquiries can be sent to shareholders@glancylaw.com . The firm is located at 1925 Century Park East, Suite 2100, Los Angeles, California 90067. Visit www.glancylaw.com for more information.

Baidu Inc (NASDAQ: BIDU) CFO Henry He stated that the company’s artificial intelligence investments could generate profits and cash payback comparable to its legacy search business in the near term.

He noted that AI revenue, which includes cloud computing and applications, now accounts for over half of Baidu’s total sales. He expects this upward trajectory to continue as demand for cloud services and chips strengthens.

Capital Allocation and Strategic Shifts

The finance chief outlined plans for a $5 billion share repurchase program and the introduction of the company’s first-ever dividend policy. He is also spearheading efforts to list Baidu’s AI chip unit, Kunlunxin, independently. Additionally, he indicated that capital market options are being considered for several other assets, though he declined to provide specifics.

Baidu recently gained primary listing status on the Hong Kong Stock Exchange. Founder Robin Li expressed hope that a shift toward AI agents and applications would drive growth for the cloud business.

Competitive Landscape and Financial Performance

Baidu faces intense competition from Alibaba Group (NYSE: BABA), Tencent Holdings (OTC: TCEHY), and ByteDance. The company’s Ernie AI models have reportedly fallen behind open-weight competitors like Alibaba and Moonshot. Meanwhile, traditional advertising revenue is declining as users migrate to AI chatbots such as ByteDance’s Doubao.

He stated that cloud revenue growth will exceed the industry average in the coming quarters. He also projected that capital expenditure spending would be lower than market expectations, aiming for a strategy of "less spending, higher growth."

What the Numbers Show

The divergence between management’s forward-looking guidance and recent financial results highlights a strategic pivot. While Q2 revenue fell 4% year-over-year to 31.3 billion yuan ($4.62 billion), missing the $4.65 billion analyst estimate, the CFO asserts that capex efficiency will improve margins. The claim that GPU cluster investments could fully pay for themselves in two to three years suggests a focus on asset turnover rather than pure top-line expansion.

He emphasized that the company is pursuing a smarter approach with reduced spending to drive higher growth rates in the near term.