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AsianFin -- Baidu, once a dominant search engine giant, has been struggling to to reinvent itself as an "AI technology company," but to no avail.

While peers like Tencent and Alibaba have aggressively expanded their ecosystems through bold capital market moves, Baidu has often appeared more cautious, even hesitant, in its investment strategies.

This approach has sparked questions about its strategic priorities, anxieties, and its unwavering yet sometimes reluctant belief in AI.

Early Moves, Late Gains

Baidu's investment strategy in the capital market has been notably restrained. From 2006 to 2025 (as of March 15), Baidu, including its investment arms Baidu Strategic Investment, Baidu Capital, and Baidu Ventures, completed 491 investment deals—significantly fewer than Tencent's 1,661 and Alibaba's 946. This stark contrast highlights Baidu's cautious approach to capital expansion.

However, Baidu's investment focus has been remarkably clear. Artificial intelligence (AI) is its most favored sector, with 107 investments, 60% of which were led by Baidu Ventures. Other key areas include healthcare (57 investments), enterprise services (56 investments), advanced manufacturing (56 investments), and automotive transportation (34 investments). Behind these seemingly diverse sectors, the AI technology is a top priority.

Baidu was one of China's earliest entrants into AI, even ahead of Google, Alibaba, and Tencent. As early as 2010, Baidu began exploring natural language processing applications, while its competitors only started similar efforts in 2015 and beyond. Despite this early advantage, Baidu's inconsistent strategies often left it "a step behind" in capitalizing on its first-mover position.

The Lu Qi Era: A Bold but Brief Push

In early 2017, former Microsoft executive Lu Qi joined Baidu at the persistent invitation of Baidu’s CEO Robin Li. Lu's arrival marked a turning point, as he declared "All in on AI" and elevated AI to the core of Baidu's corporate strategy. This shift was not only reflected in the search giant’s technology development but also in capital operations.

To support this strategy, Baidu restructured its investment arm, establishing Baidu Ventures (BV) and Baidu Capital (BC) alongside its existing strategic investment department. This "trident" structure aimed to cover early-stage technology exploration, mid-stage project cultivation, and late-stage strategic acquisitions.

Baidu Ventures, led by Liu Wei, focused on early-stage AI innovations and cutting-edge technologies like AR and VR. Baidu Capital, initially chaired by Li himself, targeted mid-to-late stage investments in the broader internet sector, emphasizing financial returns and commercial potential. Meanwhile, Baidu's strategic investment department, overseen by Li's wife, Melissa Ma, focused on acquisitions and investments aligned with Baidu's AI, autonomous driving, and cloud business.

Despite this ambitious framework, Baidu's investment results fell short of expectations. The company struggled with inefficiencies in decision-making, resource integration, and risk control, revealing persistent internal challenges.

Post-Lu Qi: A Stop-and-Go Journey

After Lu Qi's departure in 2018, Baidu's investment strategy became inconsistent, reflecting a lack of clear direction. While the company continued to champion AI, its investments in the sector paled in comparison to its spending on entertainment and media. From 2016 to 2025, Baidu invested approximately 3.114 billion yuan in AI, accounting for just 3% of its total investment, while its entertainment and media investments totaled 46.329 billion yuan.

This disparity highlights Baidu's struggle to balance immediate financial returns with long-term technological transformation. Despite launching groundbreaking AI products like the DuerOS voice assistant and the Apollo autonomous driving platform, Baidu's investment pace in AI slowed significantly between 2019 and 2023, with only three AI-related deals per year on average.

Amid these challenges, Baidu Ventures has emerged as a bright spot. Since its inception, it has completed 222 investment deals, with 31% focused on AI. The healthcare and advanced manufacturing sectors each accounted for 18% of its investments, while enterprise services made up 13%.

Under the leadership of Gao Xue, who took over as CEO in 2020, Baidu Ventures has adopted a dual-track investment strategy. The team has focused on cutting-edge fields like nanopore sequencing, single-cell mass spectrometry, and brain-computer interfaces, while also supporting AI applications in smart transportation and autonomous driving.

Baidu Ventures' open and transparent decision-making mechanism has attracted top talent and fostered collaboration with other Baidu investment divisions. By leveraging Baidu's technological platform and resources, Baidu Ventures aims to provide comprehensive support to portfolio companies, from technical integration to market promotion.

One of Baidu's most significant setbacks has been frequent leadership changes in its investment divisions. Over the past five years, Baidu's strategic investment department has seen four leadership changes, while Baidu Capital has undergone five transitions in six years. This instability has hindered long-term strategic planning and execution.

Li's centralized decision-making model has also been a double-edged sword. While it ensures alignment with his vision, it often slows down the investment process and limits the autonomy of investment teams. Internal friction between business units and the investment department has further exacerbated these challenges, causing Baidu to miss promising opportunities.

Despite its struggles, Baidu's early investments in AI, autonomous driving, and intelligent systems demonstrate its long-term vision. While these initiatives have longer return cycles, they hold transformative potential that could reshape industries.

Baidu's strength lies in its technological capabilities, but its weakness has been translating cutting-edge technology into market-ready products. As it continues to navigate its AI transformation, Baidu must address real-world problems and bridge the gap between its technological leadership and market demand.

Baidu Ventures' focus on next-generation AIGC (Artificial Intelligence-Generated Content) models and its commitment to investing $100 million in early-stage ventures over the next two years signal a renewed push toward innovation. Whether Baidu can clear the clouds of uncertainty and lead the next wave of technological revolution remains to be seen.

(Note: 1 USD equals 7.25 yuan)