China’s answer to ChatGPT? Baidu shares tumble as Ernie Bot disappoints

Eduardo Baptista and Josh Ye

BEIJING/HONG KING (Reuters) -China’s Baidu revealed its long-awaited artificial intelligence-powered chatbot, Ernie Bot, on Thursday. However, investors were disappointed by its use of prerecorded video and lack of a public launch. This sent its shares plummeting. 

    The just over an hour-long presentation, which came two days after Alphabet Inc’s Google unveiled a flurry of AI tools for its email, collaboration and cloud software, gave the world a glimpse of what could be China’s strongest rival to U.S. research lab OpenAI’s ChatGPT.

    But unlike ChatGPT, which last November launched as a free to use chatbot to the public, Baidu limited the presentation to brief videos that showed Ernie carrying out mathematical calculations, speaking in Chinese dialects and generating a video and image with text prompts.

It will only be available to a small group of users, who will receive invitation codes, starting on Thursday. However, companies can apply for the embedding of the bot in their products via Baidu’s cloud platform.

    Baidu’s Hong Kong shares tumbled as much as 10% while its CEO Robin Li spoke and eventually closed 6.4% lower, shaving over $3 billion off the Chinese search engine giant’s market valuation. 

    “It seems like the presentation was more of a monologue and scripted rather than an interactive session that people were looking for. There was no soft launch date either which likely led to negative sentiments,” Kai Wang, an analyst at Morningstar, said the following:

Baidu is seen to be a leader in a race among Chinese tech giants and startups for a rival to Microsoft ChatGPT. This was after it showcased the power of “generative AI”, which can create new text, imagery, and other content from inputs from past data.

The company’s Ernie bot is based off its AI-driven deep learning model, Ernie – short for “Enhanced Representation through Knowledge Integration”.

Li warned that the presentation at Baidu’s Beijing headquarters, which was also livestreamed on nine platforms, was imperfect. “So why are we unveiling it today? Because the market demands it,” He said.

Baidu did not immediately reply to a request for comment about the share drop, but after the presentation, a statement was published that stated that over 30,000 corporate customers had applied to test Ernie Bot’s API-facing edition. The cloud website traffic also soared.

“After the release of ChatGPT, only Baidu has made a benchmark product among the major tech companies in the world,” It was.

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Charlie Chai, an analyst at 86Research, stated that while many saw the event as a trading catalyst for others, he still considered Baidu to be the best option in China’s AI market.

“We continue to advise investors to patiently hold BIDU shares as the best ‘national champion’ play in China’s (semi-segregated) AI space,” He said.

Baidu has praised its years of investment in deep learning and artificial intelligence. It stated that it will use Ernie Bot to revolutionise the search engine and increase efficiency in cloud, smart car and household appliances.

OpenAI stated earlier this week that it began to release GPT-4 (a powerful artificial intelligence model) on Tuesday. “multimodel”This can be interpreted as images or text prompts that encourage it to create content.

Li nodded at GPT-4 throughout his speech. Although he was impressed by its ability to summarise data, he warned against viewing this through geopolitics.

“Ernie Bot is not a tool of confrontation between China and the United States,” He said.

He added that to date, 650 companies had indicated they would join the Ernie community.

(Reporting by Eduardo Baptista, Beijing; Additional reporting from Josh Ye in Hong Kong or Jason Xue Shanghai; Writing by Brenda Goh. Editing by Muralikumar Aantharaman and Kenneth Maxwell. Kim Coghill.

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