--- title: "Baidu's AI cushion shrank 8%; its defense is a Siri slot Apple has not shipped" description: "A New York class action says Baidu overstated the AI business it cast as the offset to shrinking search ads, and lead-plaintiff applications close on November 13, 2026. This week Apple and Hong Kong's transport regulator supplied the counterargument." publisher: "The Inference" section: "Markets" published: 2026-10-15T19:14:39.585Z modified: 2026-10-15T19:14:39.585Z canonical: https://theinference.org/article/baidu-s-ai-cushion-shrank-8-its-defense-is-a-siri-slot-apple-has-not-shipped language: en keywords: "Baidu, Apple, Alibaba, Class Actions, China" --- # Baidu's AI cushion shrank 8%; its defense is a Siri slot Apple has not shipped > A New York class action says Baidu overstated the AI business it cast as the offset to shrinking search ads, and lead-plaintiff applications close on November 13, 2026. This week Apple and Hong Kong's transport regulator supplied the counterargument. ## Lead-plaintiff applications close on November 13 [Baidu](https://theinference.org/markets/companies/baidu) told investors [its AI-powered business would absorb the decline in its search-advertising revenue](https://theinference.org/article/baidu-sold-ai-as-the-cure-for-its-search-decline-its-own-table-shows-the-cure-shrinking). In the June 2026 quarter the AI business itself shrank, and [a securities class action pending in the Southern District of New York](https://www.globenewswire.com/news-release/2026/10/14/3381111/32719/en/robbins-llp-encourages-bidu-stockholders-to-contact-the-firm-for-information-about-the-class-action-lawsuit-against-baidu-inc.html) says that offset was overstated [1][2]. The suit covers anyone who bought the shares between November 18, 2025, and August 17, 2026, and names co-founder and chief executive Robin Li and chief financial officer [Haijian He](https://theinference.org/markets/people/haijian-he) as individual defendants [3]. The stock closed at $86.99 on October 6, 2026, down 42% for the year [4] and far below the class-period high of $162.52 set on January 22, 2026 [3]. Investors who want to lead the class have until November 13 to apply [3]. ## The absorber shrank in the June quarter The complaint is arithmetic. Online marketing, still 53.1% of revenue in the third quarter of 2025, fell 17.6% year on year, and management cast the AI-powered business, up 48% to RMB 40 billion in 2025, as the absorber of that decline [1]. [The complaint adds that the segment figures came from internal management accounts that were never audited](https://www.prnewswire.com/news-releases/bidu-upcoming-deadline-levi--korsinsky-alerts-baidu-inc-stockholders-of-securities-class-action---contact-the-firm-302908162.html) [2]. In the June 2026 quarter the absorber shrank. The AI-powered line fell 8% quarter on quarter to RMB 12.5 billion, its annual growth slowed from 49% to 25%, and its largest piece, AI cloud infrastructure, dropped 17% to RMB 7.3 billion [1][2]. The shares fell 12.73% to $90.87 on August 18 [1]. *Chart: **The absorber itself turned down in Q2 2026** Column chart of Baidu's AI-powered business revenue: about RMB 10 billion in Q3 2025, RMB 13.6 billion in Q1 2026, RMB 12.5 billion in Q2 2026.* *AI-powered business revenue by quarter, RMB billions, as summarized in the class action filings; Q3 2025 rounded, Q4 2025 not stated. [1][2]* [Baidu's own filings](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001329099) show the problem the offset was meant to solve: twelve quarters of revenue stuck between $4.4 billion and $4.9 billion, and a $1.58 billion net loss in the September 2025 quarter [5]. *Chart: **The offset never reached the top line: 12 flat quarters** Line chart of Baidu's quarterly total revenue from Q3 2023 to Q2 2026, holding between $4.4B and $4.9B.* *Total revenue per quarter, USD billions, from Baidu's SEC filings, retrieved October 15, 2026. [5]* ## The rebuttal came from counterparties, not Baidu [Apple](https://theinference.org/markets/companies/apple) switches on Apple Intelligence in mainland China in December, two years behind the rest of the world, through [the iOS 27.3 update](https://www.macrumors.com/2026/10/14/apple-intelligence-china-ios-27-3/) [6][7]. [Alibaba](https://theinference.org/markets/companies/alibaba)'s Qwen and Tongyi Wanxiang models supply the features, while Baidu handles search and Siri-related functions [6]. The December release leaves out the redesigned Siri and Image Playground, and the Siri redesign is the piece of Baidu's assignment that users would notice most [6][7]. Hong Kong's Transport Department, which licensed Baidu's robotaxis in 2024, opens [the city's first large public trial on October 21](https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3370979/over-1000-hongkongers-ride-baidus-robotaxis-city-first-public-trial): more than 1,000 riders on a 5.1 km loop in Tung Chung, a backup operator in every car, on a fleet that has covered 280,000 km in the city [8]. Neither announcement carries a fee. ## The capex build continues while the calendar closes Whether or not the case survives, the build continues: Alibaba, [Tencent](https://theinference.org/markets/companies/tencent) and Baidu [spent $20 billion on capital expenditure in the June quarter](https://www.chinaon.ai/stories/china-hyperscaler-capex-100b-negative-fcf-oct2026.html), all three posting negative free cash flow for the first time, toward roughly $100 billion across China's four biggest spenders this year [9]. Tung Chung closes on November 3 [8], lead-plaintiff motions close on November 13 [1], and Apple ships in December [6]. The tell is the AI-powered line in Baidu's next quarterly report, the first full quarter after the contraction. The bull case, [a modeled fair value of $146.50 against the $86.99 close](https://finance.yahoo.com/markets/stocks/articles/baidu-bidu-stock-dropped-drawing-140541013.html), is a bet that a disclosed fee arrives before the verdict does [4]. ## Takeaway Baidu's AI segment, the promised offset to shrinking search ads, fell 8% in the June quarter and the complaint says its figures were never audited; the December Apple launch and the Hong Kong robotaxi trial carry no disclosed fees, so the next quarterly report is the tell. ## Sources 1. [Robbins LLP via GlobeNewswire, 'Robbins LLP Encourages BIDU Stockholders to Contact the Firm for Information About the Class Action Lawsuit Against Baidu, Inc.', 14 October 2026](https://www.globenewswire.com/news-release/2026/10/14/3381111/32719/en/robbins-llp-encourages-bidu-stockholders-to-contact-the-firm-for-information-about-the-class-action-lawsuit-against-baidu-inc.html) 2. [Levi & Korsinsky via PR Newswire, 'BIDU Upcoming Deadline: Levi & Korsinsky Alerts Baidu, Inc. Stockholders of Securities Class Action', 14 October 2026](https://www.prnewswire.com/news-releases/bidu-upcoming-deadline-levi--korsinsky-alerts-baidu-inc-stockholders-of-securities-class-action---contact-the-firm-302908162.html) 3. [Levi & Korsinsky via Business Wire, 'Reminds Baidu, Inc. Investors of the Pending Class Action Lawsuit With a Lead Plaintiff Deadline of November 13, 2026', 18 September 2026](https://www.businesswire.com/news/home/20260918015218/en/Levi-Korsinsky-Reminds-Baidu-Inc.-Investors-of-the-Pending-Class-Action-Lawsuit-With-a-Lead-Plaintiff-Deadline-of-November-13-2026---BIDU) 4. [Simply Wall St via Yahoo Finance, 'Baidu (BIDU) Stock Dropped, What Is Drawing Fresh Attention?', 6 October 2026](https://finance.yahoo.com/markets/stocks/articles/baidu-bidu-stock-dropped-drawing-140541013.html) 5. [Baidu, Inc. quarterly figures from its SEC filings (EDGAR), retrieved 15 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001329099) 6. [TechNode, 'Apple reportedly plans December China launch for Apple Intelligence using Alibaba models', 15 October 2026](https://technode.com/2026/10/15/apple-reportedly-plans-december-china-launch-for-apple-intelligence-using-alibaba-models/) 7. [MacRumors, 'Apple Intelligence Coming to China in December With iOS 27.3', 14 October 2026](https://www.macrumors.com/2026/10/14/apple-intelligence-china-ios-27-3/) 8. [South China Morning Post, 'Over 1,000 Hongkongers to ride Baidu's robotaxis in city-first public trial', October 2026](https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3370979/over-1000-hongkongers-ride-baidus-robotaxis-city-first-public-trial) 9. [China on AI, 'China's Top Four Hyperscalers Head for $100B Spend in 2026', 11 October 2026](https://www.chinaon.ai/stories/china-hyperscaler-capex-100b-negative-fcf-oct2026.html) --- Baidu's AI cushion shrank 8%; its defense is a Siri slot Apple has not shipped — The Inference. Canonical: https://theinference.org/article/baidu-s-ai-cushion-shrank-8-its-defense-is-a-siri-slot-apple-has-not-shipped