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ZHEJIANG, CHINA – MARCH 16, 2023: The logo of ERNIE Bot, a chatbot developed by the Chinese search engine Baidu, is prominently displayed.
Long Wei | Future Publishing | Getty Images
Shares of Baidu, a prominent Chinese technology enterprise, experienced a notable increase of 10.7% in Asian markets on Tuesday. This rise seems to stem from investor enthusiasm regarding the introduction of two innovative AI models over the weekend.
On Sunday, Baidu unveiled its latest iteration of the “Ernie” foundational model, as well as a new reasoning model that the company has claimed can compete with DeepSeek’s R1 model. However, as of now, these assertions have not been independently verified by CNBC.
A reasoning model is an advanced language model designed to tackle intricate problems by analyzing inputs in a human-like manner. This involves deconstructing prompts into manageable segments and exploring various methodologies before generating a response.
Kai Wang, a senior equity analyst at Morningstar, suggested that the surge in Baidu’s stock price may be a belated reaction to the launch of these new models. He highlighted that Baidu is working hard to reclaim its position as a leader in China’s advancing AI landscape. “The stock hasn’t received as much attention as other major players, yet it remains a key platform poised to benefit from the increasing demand for AI solutions, particularly as businesses require robust support for their computing and scaling needs,” he remarked.
The term “hyperscaler” refers to large cloud computing entities that operate extensive data centers to meet substantial processing and storage requirements.
According to information released on Sunday, Baidu’s ERNIE X1 reasoning model purportedly matches the performance of DeepSeek’s R1 model while being offered at half the price. The company claims that this new model possesses enhanced capabilities in understanding, planning, reflection, and evolution, as reported by Reuters.
DeepSeek made a significant impact on the AI industry earlier this year, launching its R1 open-source reasoning model in January. The company asserted that despite using less powerful chips, it was able to create a product that could compete with American counterparts at a significantly lower cost.
This competitive edge allowed DeepSeek to surpass Baidu in the race for supremacy in the AI sector, even though Baidu was among the first companies globally to introduce a ChatGPT-like chatbot with its Ernie Bot. Wei Sun, lead analyst for artificial intelligence at Counterpoint Research, noted that other tech giants, including Alibaba and Bytedance, have also gained traction in this space.
Both Baidu’s new models and DeepSeek’s R1 have been released as open-source, allowing external developers to access the source code for potential modifications and redistribution. This marks a strategic shift for Baidu, which had previously emphasized proprietary models.
By transitioning to open-sourcing its models, Baidu aims to re-establish its technological influence as a standard within the industry, thereby boosting its standing in the AI sector and expanding its market reach, according to Sun.
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