Can ERNIE-Powered AI Search Reinvent Baidu's Core User Experience?

Baidu’s BIDU generative AI overhaul marks one of the most ambitious attempts yet to reinvent the search experience. The company’s ERNIE-powered AI Search is shifting from static, hyperlink-driven results to intelligent, multimodal-first AI-generated responses, transforming search from an information retrieval tool into an adaptive, conversational system. This initiative is expected to make Baidu’s AI Search more intuitive, visual and personalised, positioning the company at the forefront of generative AI adoption among global peers. The transformation’s scale is substantial, with AI Search reaching over 90% of Baidu App’s monthly active users by July, signalling rapid adoption across its ecosystem.

At the heart of this reinvention is the ERNIE model family, which powers Baidu’s AI Search ecosystem, designed to understand user intent, complete tasks and connect directly to services. The company is expected to deepen this integration by evolving AI Search from discovery to task completion, embedding visual and interactive elements such as images and videos at the top of results, and personalising responses based on user context and preferences. Baidu is also linking AI Search to real-world utilities like maps, museum information and payment tools, which could turn it into a gateway for service execution rather than simple information retrieval.

However, execution risks around content quality and relevance remain significant. Rapidly deploying AI-generated responses at this scale raises concerns about accuracy and hallucination, challenges that could hamper user trust and overall experience. The Zacks Consensus Estimate for Baidu’s third-quarter 2025 revenues is pegged at $4.31 billion, down 9.96% year over year, reflecting near-term strain from this transition. Ultimately, Baidu’s ERNIE-powered AI Search is expected to redefine how users search, learn and transact, provided innovation evolves in step with reliability and user confidence.

Baidu Faces Intensifying AI Search Rivalry

Baidu’s AI-driven search transformation is unfolding amid fierce competition from Alphabet GOOGL and Microsoft MSFT. Alphabet’s Google Search is accelerating its Gemini-powered generative interface, pushing multimodal reasoning into everyday queries. Microsoft, through Bing and OpenAI integration, continues to redefine AI-assisted search experiences. Both Alphabet and Microsoft are scaling conversational tools that directly rival Baidu’s ERNIE-powered search ecosystem. As Alphabet refines ad personalisation and Microsoft extends AI capabilities across Edge and Copilot, Baidu’s ability to sustain differentiation through local data strength and model efficiency will determine its resilience in this escalating global AI search race.

BIDU’s Price Performance, Valuation & Estimates

Baidu’s shares have jumped 38.8% in the year-to-date period, while the Zacks Internet - Services industry and the Zacks Computer and Technology sector have appreciated 32.1% and 23.9%, respectively.

BIDU’s YTD Price Performance

From a valuation standpoint, BIDU’s forward 12-month price/earnings ratio is 14.24X, which is below the industry average of 24.41X. BIDU has a Value Score of B.

BIDU’s Valuation

The Zacks Consensus Estimate for BIDU’s third quarter 2025 earnings is pegged at $1.32 per share, down by a penny over the past 30 days, indicating a 44.3% year-over-year decline.

Baidu, Inc. Price and Consensus

Baidu, Inc. price-consensus-chart | Baidu, Inc. Quote

Baidu currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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