In a bold move to reestablish its leadership in the AI world, Baidu just rolled out two innovative AI models on Sunday. This announcement didn’t go unnoticed, as Baidu’s stock price shot up by 10.7% by Tuesday. Investors seem to be quite excited about these new developments.
So, what’s new? Baidu introduced an upgraded version of its foundational “Ernie” model and a fresh reasoning model, which is being compared to DeepSeek’s R1. Now, while CNBC hasn’t independently verified these claims, the reasoning model is designed to tackle complex problems by breaking them down into smaller parts and exploring different solutions—much like how we humans think things through.
Kai Wang, a senior equity analyst at Morningstar, described the stock’s jump as a “delayed reaction” to Baidu’s strategic moves. He pointed out, “The stock also hasn’t gotten as much love as the other big players, but it’s a platform that stands to gain from the growing demand for AI. Enterprises will need help with hosting, scaling, and computing power.”
ERNIE X1, Baidu’s latest, is said to match DeepSeek’s R1 model in performance but at a much lower cost. It offers improved capabilities in understanding, planning, and evolution. This shift from proprietary to open-source models is a big deal for Baidu, allowing the community to freely modify and share the source code. It’s a strategic move aimed at boosting Baidu’s influence and market share in the AI community, especially after DeepSeek shook things up with its cost-efficient R1 model.
Wei Sun, an AI principal analyst at Counterpoint Research, mentioned, “Baidu’s competitiveness hinges on whether its new models truly deliver on the promised performance and cost advantages.” As China’s AI landscape continues to evolve, Baidu is clearly aiming to set a new standard, challenging companies like Alibaba and Bytedance that have been gaining ground recently. The success of these models could redefine Baidu’s role as a leader in AI innovation.
