Fitch Ratings downgraded Baidu Inc.'s long-term issuer default rating to 'A-' from 'A'. The agency maintained a stable outlook for the company. This action follows a structural decline in Baidu's core search advertising business.
Lower EBITDA generation prompted the downgrade. Emerging AI search tools and competing chatbots are eroding the monetization of legacy search operations. Competition from short-video platforms and social media is also intensifying.
Advertisers are shifting budgets away from traditional search. While Fitch expects AI Cloud Infrastructure revenue to accelerate, it projects EBITDA will remain below historical levels. The stable outlook suggests another downgrade is not imminent.