Prime Highlights: 

Baidu’s shares rose 10.7% following the release of two new AI models over the weekend. 

Baidu launched an upgraded ERNIE model and a new reasoning model, which it claims rivals DeepSeek’s R1 in performance. 

Key Background: 

Shares of Baidu, the Chinese technology giant, saw a notable increase of 10.7% on Tuesday, driven by the recent launch of two advanced artificial intelligence models. The company unveiled these new models over the weekend, which include an upgraded version of its ERNIE model and a new reasoning model that Baidu claims rivals DeepSeek’s R1 model in performance. Although CNBC has been unable to independently verify these claims, the development marks a significant step in Baidu’s efforts to regain dominance in China’s competitive AI sector. 

The ERNIE X1 reasoning model, according to Baidu, offers robust capabilities in understanding, planning, and evolving solutions to complex problems, all at half the price of DeepSeek’s R1 model. This new model is designed to break down intricate queries in a manner akin to human reasoning, providing a more efficient approach to AI tasks. 

Kai Wang, a senior equity analyst for Morningstar, suggested that the stock’s rise is likely a delayed market reaction to the introduction of these models, as Baidu positions itself to lead the AI space once again. Wang also noted that Baidu’s platform is poised to benefit from growing AI demand, particularly as businesses require advanced computing power and hosting services. 

Baidu’s move to make these models free for individual users marks a departure from its earlier subscription-based model, reflecting a shift towards open-source technology. The company also plans to make its next-generation ERNIE model open-source by June 30, a strategy aimed at increasing its influence within the AI community and expanding its market share. This shift is seen as part of Baidu’s broader effort to reclaim leadership in a rapidly evolving sector.