Analysts remain optimistic about the latest version of Baidu's generative artificial intelligence model, Ernie 4.0. Despite this, Baidu's stocks did not mirror the sentiment, with the Hong Kong-listed shares closing 1.65% lower than the 0.75% rise of the Hang Seng Index, and the Nasdaq-listed ones falling 4.12%.Despite the optimism from analysts, investor sentiment was still muted and Baidu's share price remained unchanged.
Analysts are optimistic about the latest version of Baidu's generative artificial intelligence model, Ernie 4.0, but investors have yet to react. At Baidu World 2023 CEO Robin Li announced the more powerful Ernie 4.0 with significant improvements in comprehension, generation, reasoning and memory capabilities. According to Citi analysts in their report, Ernie 4.0 is 3.6x better in training algorithms. At the event Li also said that the model is on par with OpenAI's GPT-4. Jefferies analysts also maintained their "buy" rating on Baidu with a $216 price target. Despite the positive sentiment from analysts, investors have yet to react and the share price of Baidu remains unchanged.
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On March 16, Baidu released Ernie 3.0 to a select group of users. This was followed by the launch of Ernie 3.5 in June, with Baidu claiming it had surpassed ChatGPT and GPT-4 in several areas. After receiving governmental approval, Ernie 3.5 was opened up to the public on Aug. 30.
Xiaolin Chen, head of international at KraneShares, noted that Baidu's statement of being on par with GPT-4 was a noteworthy accomplishment for the Chinese tech giant. However, Chen acknowledged that the effectiveness of AI models may depend on the tasks at hand. She further suggested that a comprehensive comparison of Ernie with other models would need to assess Ernie's performance across various applications, and added that the process of comparing different AI models can be challenging due to the different methods and benchmarks used in testing.
Investors were not enthusiastic about the progress. Baidu's Hong Kong-listed shares closed 1.65% lower on Tuesday, in contrast to the 0.75% growth of the Hang Seng Index. Additionally, its Nasdaq-listed shares went down by 4.12%. According to Morningstar Asia's senior equity research analyst Kai Wang, investors are still troubled by questions such as how Baidu will cope with chip sanctions which could hinder growth of its AI division. Wang noted that the conference mainly showcased the model's abilities instead of providing an outlook on the long-term strategy of the AI business. There was no new info in this regard.
On Tuesday, the United States prohibited exports of AI chips, including Nvidia H800, to China. This move was part of Washington's effort to stop China from obtaining or fabricating high-tech semiconductor chips, which could be used to further its military capabilities. High-performance memory chips are essential for large language models like ChatGPT and Ernie, as they store details from past conversations and user preferences, allowing for more human-like responses. CNBC's Michael Bloom contributed to this report.
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