Baidu rises as hope grows on China’s response to ChatGPT

(Bloomberg) — Baidu Inc. rose more than 15% after it said it was on track to publicly launch its ChatGPT-like service in March, fueling anticipation for China’s potentially biggest entry in the race to the creation of realistic AI robots.

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Its shares gained more in about eight months after the company said it called the service “Wenxin Yiyan” or “Ernie Bot” in English. Baidu is expected to complete internal testing in time for next month’s launch, the statement said.

Read more: Google releases ChatGPT Rival “Bard” to early testers

News of Baidu’s foray into the red-hot generative AI arena has ignited Chinese AI-related stocks from Beijing Deep Glint Technology Co. to Cloudwalk Technology Co. in recent days. The craze reflects surging investor interest since OpenAI’s ChatGPT debuted, attracting eye-watering investment from Microsoft Corp. In addition to Baidu, a growing number of companies large and small are racing to try to outdo the startup in the suddenly hot world of ‘AI Services.

China’s largest search engine company plans to initially incorporate Ernie into its core search services. The tool will allow users to get conversation-style search results, just like OpenAI’s popular platform.

Baidu has spent billions of dollars on AI research in a years-long effort to move from online marketing to deeper technology. Its Ernie system, a large-scale machine learning model that has been trained on data for several years, will be the foundation of its next ChatGPT-like tool.

Read more: China giant Baidu research to launch ChatGPT-style bot

AI is a rare bright spot in a shrinking, job-cutting tech industry. Generative AI firms, named for their ability to generate new content from digital treasures of text, photos and art, are attracting large sums of venture capital dollars. In 2022, they raised about $920 million in the United States, according to data from PitchBook, up 35% from a year earlier.

In January, Microsoft agreed to pour $10 billion into OpenAI, one of the largest startup investments ever. Additionally, less than three months into 2023, several AI-generative companies have raised or are in talks to cumulatively raise up to $700 million, according to funding round reports. A running list curated by the Homebrew AI Club, a group intended as a meeting place for AI workers, has more than 150 startups in the sector.

Read more: OpenAI is drawing competition from the fleet of startups

The ChatGPT theme has also captivated global stock markets, driving up the shares of anything related to artificial intelligence. Investors in Chinese stocks have embraced the theme since the Lunar New Year holiday, even as the recent recovery fueled by the reopening in the broader market started to falter last week.

However, the strong run-ups of some stocks have started to show signs of strain, despite the good news from Baidu. Deep Glint Technology slipped as much as 10% on Tuesday, trimming its gain for the year to 82%, while Guangdong TianYiMa Information Industry Co. slumped as much as 7.2%.

“The market likes to speculate on far-fetched themes like this, especially when there is a shortage of new funds,” said Wu Wei, fund manager at Beijing Win Integrity Investment Management Co. “When it comes to just existing funds that rotate within sectors, These trades are set to go just as fast as they came, leaving retail investors to pocket losses.

–With assistance from Vlad Savov, Jeanny Yu and April Ma.

(Adds the performance of other stocks in the last three paragraphs)

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