Baidu shares tank after ChatGPT rival Ernie Bot a flop at launch party

China’s Baidu on Thursday unveiled its much-anticipated artificial intelligence-powered chatbot, known as Ernie Bot, but its use of pre-recorded video and lack of a public launch disappointed investors, sending its shares plunging. declined.

The more than an hour-long presentation came two days after Alphabet’s Google rolled out AI tools for its email, collaboration and cloud software, giving the world a glimpse of what could be China’s strongest rival to US research lab OpenAI’s ChatGPT It is possible

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But unlike ChatGPT, which launched last November as a free to use chatbot for the public, Baidu limited the presentation to brief videos showing Ernie doing mathematical calculations, in Chinese dialects. Was shown creating a video and image with speaking and text prompts.

The company said it will be open for testing only to an initial group of users with invitation codes from Thursday, while companies can apply to embed the bot in their products through Baidu’s cloud platform.

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

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

Baidu is seen as a leader among tech giants and startups in China in the race to develop a rival to Microsoft-backed ChatGPT, which took the world by storm after showing the power of so-called generative AI. , can create imagery. and other content based on input from past data.

The company’s Ernie bot is based on its AI-powered deep learning model, Ernie – short for “advanced representation through knowledge integration”.

During the presentation at Baidu’s Beijing headquarters, which was livestreamed on nine platforms, Li cautioned that it was not perfect. “So why are we unveiling it today? Because the market demands it, ”he said.

Baidu did not immediately respond to a request for comment on the share drop, but published a statement after the presentation saying that more than 30,000 corporate users had downloaded the application to test the API of the business-facing version of Ernie Bot. And the traffic to Baidu’s cloud website soared.

“After the release of ChatGPT, only Baidu has created a benchmark product among the world’s leading tech companies,” it said.

national champion

Charlie Chai, an analyst at 86Research, said while the event was clearly a disappointment to many who saw it as a business catalyst, he still saw Baidu as the best bet in China’s AI space. .

“We continue to advise investors to hold BIDU shares as the best ‘national champions’ in China’s (semi-isolated) AI space,” he added.

Baidu has touted its many years of heavy R&D investment in artificial intelligence and deep learning, saying it plans to use it to revolutionize its search engine as well as increase efficiency in the cloud, smart cars and home appliances. plans to use Ernie Bot for

Earlier this week, OpenAI said Tuesday that it is starting to release a powerful artificial intelligence model, known as GPT-4, that it describes as “multimodal.” That can inspire images as well as text to generate prompt content.

Lee nodded to GPT-4 during his speech, saying that it surprised him with its ability to summarize information, but cautioned against viewing it through the lens of geopolitics.

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

He added that to date, 650 companies have said they will join the Ernie ecosystem.