Baidu Shares Rise as it Ramps Up Enterprise AI Investments

Chinese technology company Baidu says its fourth-quarter revenue has risen 6% due to its rapid AI application growth and expanding advertising business

Baidu recently reported an adjusted income of 34.95bn yuan (US$4.92bn) for its fourth quarter, surpassing all expectations.

As the largest internet search engine in the People’s Republic of China, Baidu typically makes the majority of its revenue from advertising projects. However, as consumers are starting to spend less across the country, the company has re-focused its attention on developing AI.

In 2023, Baidu launched its conversational ERNIE chatbot to reap the benefits of AI technology. Given its success, the company now seeks to partner with other businesses to attract more clients and boost its AI offerings, according to Reuters.

Capitalising on Gen AI to create business opportunities

The People’s Republic of China has been quick to develop its own AI economy, as part of its mission to increase its compute power by 50% by 2025 and become a global leader in AI by 2030.

Focusing on the practical application of AI models, companies are advancing the technology quickly, having invested in memory storage, data networks and data centres. Baidu is one such example, having reportedly ordered 1,600 of Huawei’s 910B Ascend AI chips for 200 servers towards the end of 2023.

In considering its market position, Baidu highlighted in 2023 that its ERNIE Bot will add more high-quality plugins from Baidu itself, in addition to third parties. The company stated at the time: “We are committed to opening the plugin ecosystem to third-party developers, empowering them to build unique applications based on ERNIE.”

ERNIE services have grown exponentially since its 2023 release, having launched a paid-for premium version of the chatbot in November 2023 to rival the likes of ChatGPT. Baidu CEO Robin Li reported that ERNIE had reached 26,000 enterprise clients, marking a 150% increase from the previous quarter.

The company is hopeful that committing to Gen AI will enable it to capitalise on new growth opportunities, with Li highlighting that throughout 2023, “we made significant strides to advance Ernie Bot, reinventing our products and services, and achieving with monetisation.”

Revenue rises, but profit falls in a slowing market

With the commercial market slowing, The Times of India reports that Baidu has seen a 48% decline in profits, which was worse than anticipated. It highlights how the company is starting to further prioritise its AI developments to remain competitive in a rapidly-evolving business landscape.

In response, Baidu is seeking to attract enterprise clients to its AI offerings. The company recently partnered with Lenovo to feature its generative AI (Gen AI) technology on Lenovo smartphones.

Lenovo is a crucial example of a company looking to boost its AI capabilities, having entered numerous similar partnerships with leading telco companies to offer hybrid AI solutions, as reported by our sister publication, Data Centre Magazine.

China’s position in the AI market is also particularly relevant given the restrictions imposed on the country by the United States (US) government. The executive order aims to increase regulations in Chinese AI, semiconductor and quantum computing sectors, inevitably impacting business relations and investment opportunities.

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