BIDU · Forward model · Legacy Business · Bear case
What has to happen in Legacy Business
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Legacy Business
Basis quarter$1.53B
Final quarter$872M
Implied CAGR−11%
Final revenue mix15%
The old Baidu: classic search advertising, feed monetisation and the non-AI mobile ecosystem. It fell 23% year over year in Q2 2026 to RMB 10.4B and is now smaller than the AI half for the first time. This is the melting ice cube, and how fast it melts decides whether the company's total revenue ever grows again.
Last four quarters
2025 Q3
$1.84B
Estimated
2025 Q4
$1.81B
Estimated
2026 Q1
$1.50B
Estimated
2026 Q2
$1.53B
Estimated
Classic search-results advertisingFeed and in-app advertisingNon-AI mobile ecosystem services
Sequential growth
−3.0%/qtr
decaying toward −0.5%
-3% a quarter, about -11% a year, against -23% year over year and +3% this quarter. The decline is assumed to be decelerating.
Legacy Business
Latest: $872M (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $2.11B |
| 2025Q2 | $2.00B |
| 2025Q3 | $1.84B |
| 2025Q4 | $1.81B |
| 2026Q1 | $1.50B |
| 2026Q2 | $1.53B |
| 2026Q3E | $1.47B |
| 2026Q4E | $1.41B |
| 2027Q1E | $1.36B |
| 2027Q2E | $1.31B |
| 2027Q3E | $1.27B |
| 2027Q4E | $1.23B |
| 2028Q1E | $1.19B |
| 2028Q2E | $1.16B |
| 2028Q3E | $1.13B |
| 2028Q4E | $1.10B |
| 2029Q1E | $1.07B |
| 2029Q2E | $1.04B |
| 2029Q3E | $1.02B |
| 2029Q4E | $993M |
| 2030Q1E | $970M |
| 2030Q2E | $949M |
| 2030Q3E | $928M |
| 2030Q4E | $909M |
| 2031Q1E | $890M |
| 2031Q2E | $872M |
Assumptions & reasoning
- Down 23% year over year - but UP 3% sequentially, off Q1's low. One quarter is not a bottom; it is the first thing a bottom looks like.
- 2025 Q3 is the one estimated split in this model: that quarter's release published the Core AI-powered components but not the Legacy and Others lines beneath them, so Others is interpolated at RMB 2.6B and Legacy takes the residual, RMB 12.46B. Every other quarter's Legacy figure is Baidu's own.
- Modelled at -3% a quarter decaying toward -0.5%: roughly -11% in year one, easing to about -2% a year in the terminal year. That is materially kinder than the -23% just printed, on the view that the AI-native line is cannibalising this one internally rather than the whole advertising pool shrinking at 23% forever.
- The single most important interaction in this model is between this line and AI-native Marketing. If the decline here is genuine substitution, the two roughly net; if it is share loss to Tencent, ByteDance and Alibaba, the AI line does not catch it and total revenue keeps falling.
- Margin starts at 36% and DECLINES to 30%. A shrinking ad business loses operating leverage; it does not gain it. This is the only vertical here whose margin gets worse.
- Little capex. The infrastructure this business runs on was built years ago and is being repurposed for the cloud line.