Baidu stock is recovering after falling sharply on the demo of ERNIE chatbot, its ChatGPT-style service

Hong Kong

Shares in Chinese search giant Baidu rallied sharply a day after the unveiling of ERNIE bot, its answer to the ChatGPT craze.

Its shares rose 14.3% in Hong Kong on Friday, making it the biggest gainer on the Hang Seng Index (HSI). They were also up 3.8% in New York during US trade on Thursday.

A day earlier, Baidu (BIDU) was the biggest loser of the same index. Its Hong Kong shares fell 6.4% after a public demonstration of its bot failed to impress investors. More than 650 companies have joined the ERNIE ecosystem since February, CEO Robin Li said during the presentation.

The reversal came after the company said more than 30,000 businesses signed up to test its chatbot service within two hours of its demonstration.

“The high level of corporate interest is positive, and we expect Baidu to continue serving China’s corporate demand for generative AI,” Esme Pau, Macquarie’s head of internet and digital assets in China and Hong Kong, told CNN.

She said the company’s shares rallied on Friday as some users, including analysts, gave positive feedback on their own experiences with ERNIE, suggesting the bot had more advanced capabilities.

Baidu Chairman and CEO Robin Li presents the company's AI chatbot, ERNIE Bot, on March 16 in Beijing.

During the presentation, Baidu showed how its chatbot can create a company newsletter, develop a company slogan and solve a math puzzle.

But the stock plummeted Thursday because the demo “was pre-recorded and not live, making investors skeptical of the robustness of the ERNIE bot,” Pau said.

Baidu’s demonstration also came just days after the launch of GPT-4, which “raised the bar for ERNIE,” she added.

GPT-4 is the latest version of the artificial intelligence technology behind ChatGPT. The service impressed users this week with its ability to simplify coding, quickly create a website from a simple sketch, and pass exams with good grades.

Pau noted that Baidu’s shares were already “slightly down” before demonstrating its software on Thursday, emphasizing pressure from investors who raised expectations following GPT-4’s launch.

“ERNIE doesn’t have that either [same] Multilingual like GPT-4 and still needs improvement for English queries,” she said. “Additionally, the launch of ERNIE did not provide sufficient quantifiable metrics compared to the launch of GPT-4 earlier this week.”

Like ChatGPT, ERNIE is based on a language model that is trained online on huge databases to generate convincing responses to user input.

Li said Baidu’s expectations for ERNIE are “close to ChatGPT or even GPT-4.”

However, he acknowledged that the software “isn’t perfect yet,” adding that it will be rolled out to enterprise users first. The service is not yet publicly available.

Baidu announced its chatbot last month. Some critics say the service will fuel an existing US-China rivalry over emerging technologies.

Li tried to shake off that comparison during launch, saying the bot is “not a tool for China-United States confrontation in science and technology, but a product of generations of Baidu engineers pursuing the dream of bringing the world together.” changing technology.”

“It’s a brand new platform for us to serve hundreds of millions of users and empower thousands of industries,” he said.

According to Baidu, its service is notable for its advanced understanding of Chinese queries, as well as its ability to generate different types of responses.

“ERNIE Bot can produce text, images, audio and video at a text prompt and is even capable of delivering speech in multiple local dialects such as Sichuan dialect,” the company said in a statement.

In comparison, GPT-4 can also analyze photos, but currently only generates text responses, according to developer OpenAI.

Baidu isn’t the only Chinese company working on such technology. Last month, Alibaba (BABA) announced plans to launch its own ChatGPT-style tool, adding to the list of tech giants jumping on the chatbot bandwagon.

So far, analysts say Baidu has a first-mover advantage in China.

“In our view, ERNIE is three to six months ahead of its potential competitors,” said Pau.

— CNN’s Mengechen Zhang contributed to this report.

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