Baidu Inc. saw a staggering 14% surge in its share value on Friday, following the endorsement of the company’s newly unveiled ChatGPT-like service by several brokerages, including Citigroup. Baidu suffered a 6.4% loss on Thursday after founder Robin Li launched China’s answer to ChatGPT via recorded video. The video left investors disappointed as they were expecting a real-time demonstration of the technology. Artificial intelligence is one of the critical areas of competition between the US and China, and Baidu is seen as the frontrunner in this field from China’s tech sector.
The product, named Ernie Bot, is regarded as a gauge of how China’s offerings compare with those from Alphabet Inc. and ChatGPT maker OpenAI Inc. Despite the lackluster launch, the product has received positive reviews from analysts, and this has led to a significant jump in Baidu’s share value. Bank of America analysts, including Miranda Zhuang, said in a note that they had tested the product for various tasks such as advice, analysis, paper writing, and picture generation and were satisfied with the results. Although their sample size was small, they added that the product is not static but continuously learning and improving.
In a meeting on the launch day, Citigroup also tested Ernie and found that while it was not perfect, it could answer the majority of complicated or absurd questions put forward. Analysts, including Alicia Yap, noted that the technology showed promise. Baidu’s shares saw their most significant intraday gains in over a month, driving a rally in AI-linked stocks such as SenseTime Group Inc., chip designer Cambricon Technologies Corp., and Arcsoft Corp., with gains ranging between 8% to 15%.
Despite the positive reviews, some of the questions in Baidu’s debut videos appeared rudimentary and could easily be addressed by conventional search engines. For instance, one question asked which part of China the Three-Body Problem author comes from. Many users took to Chinese social media to mock the event, calling it a “low energy” debut.
The lack of a live demo during Thursday’s launch raised questions over Ernie’s ability to match OpenAI’s ChatGPT, which has impressed and worried users since its November launch. Chinese AI efforts are currently lagging behind their US counterparts, but industry pioneer and bestselling author, Kai-Fu Lee believe that they should catch up over time, thanks to vast data hoards and experience with rapid rollouts.
The first version of the Ernie Bot was developed back in 2019. Baidu invested in AI for more than a decade and has since shifted its focus to AI apps, along with autonomous driving technology. A fifth of its revenue, about 23.3 billion yuan was spent on research and development, in the 2022 fiscal year. Ernie Bot usage plans seem to be diverse, ranging from searches to AI cloud, and smart devices. Robin Li stated that 650 companies have stepped up to use Ernie Bot.
A Chinese technology giant, Baidu is the brainchild of founder Robin Li. The multinational company was founded in 2000 and is headquartered in Beijing, China. It is one of the largest internet companies and also one of the most popular search engines in the world. It is the top search engine in China and has control over 75% of the country’s market share.
The company provides a variety of services, the most notable ones being internet-related and artificial intelligence services. Baidu’s primary revenue stream is from its Search Engine Marketing services. Their Pay for Placement(P4P) services allow the customers to do their bidding for placement, where the advertisers select their desired keywords and bid for the first link placement in search results.