What happened
Shares of Baidu (BIDU +5.06%) jumped 12% on Tuesday after the Chinese tech giant announced plans to enter the artificial intelligence (AI)-powered chatbot arena.
So what
The rapid adoption of OpenAI's wildly popular ChatGPT has sparked a massive wave of interest in AI stocks among investors. The chatbot uses advanced generative AI technology that can answer complex questions and create novel content. People can interact with ChatGPT in a conversational way, which has made it easier to use than previous AI applications.
Baidu is testing its version of a ChatGPT-like service. The chatbot will be called ERNIE Bot, which stands for "Enhanced Representation through Knowledge Integration." Baidu said ERNIE Bot will be able to conduct text-to-image generation and language generation tasks.
NASDAQ: BIDU
Key Data Points
Baidu plans to launch the new AI-powered service in March, according to Reuters. The Chinese internet titan will reportedly release ERNIE Bot as a stand-alone application as it works to integrate the technology into its core search engine.
Now what
AI has been a major area of focus and investment for Baidu for over a decade. Investors haven't placed much value on these efforts, but that appears to be changing. Microsoft's multibillion-dollar investment in OpenAI in late January has stoked a frenzy among investors for nearly anything AI-related in recent weeks.
AI has the potential to have a significant impact on Baidu's business. The cutting-edge tech "should strengthen its competitive moat from other search engines and could potentially enhance the attractiveness of advertising on the platform," Morningstar analyst Kai Wang told Bloomberg.
