Baidu soars after analysts give Ernie a thumbs-up after test run

(Bloomberg) — Baidu Inc. rose more than 14% on Friday after brokerage firms, including Citigroup, tested and gave tentative approval to the company’s just-unveiled ChatGPT-like service.

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Baidu’s jump reversed a 6.4% loss on Thursday after founder Robin Li debuted China’s response to ChatGPT via recorded video, disappointing investors looking for a real-time demo of the country’s most well-known entry in a race for world dominance technology hoped.

At a meeting that same day, Citigroup put Ernie Bot through its paces and found that while it wasn’t perfect, it could answer most complicated or absurd questions, analysts like Alicia Yap wrote.

Shares of the Chinese company gained the most on an intraday basis in over a month, leading to a rally of between 8% and 15% in AI-related stocks including SenseTime Group Inc., chip designer Cambricon Technologies Corp. and Arcsoft Corp.

“While the brief presentation, the ‘modest’ comments from the CEO and CTO, and the ‘recorded’ ERNIE demo may have disappointed investors and the media, the live demos during our post-event meeting with the CFO and IR team left us enthralled confirms ERNIE’s prolific ability “while not yet perfect” has a comparable ability to answer the vast majority of our complicated/absurd questions,” the analysts wrote. Citi didn’t specify the questions they asked the AI.

Some of the questions in Baidu’s videos appeared rudimentary and addressable by traditional search engines, such as, “What part of China is the author of the three-body problem from?” Many users took to Chinese social media to poke fun at the event make, with one user calling them a “low-energy” debut.

Citi, Jefferies positive on Baidu After AI Bot Demo: Street Wrap

Thursday’s launch should have been a turning point for China’s tech industry, lifting the lid on AI advances in the world’s largest internet economy. The omission of a live demo raised questions about Ernie’s ability to compete with OpenAI’s ChatGPT, which has both impressed and worried users since its launch in November.

According to industry pioneer and best-selling author Kai-Fu Lee, Chinese AI efforts are currently lagging behind their U.S. competitors, although they should catch up over time thanks to vast data sets and experience with rapid rollouts.

(Updates with share action from first paragraph)

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