Baidu Surges on Stock Market with New AI Pricing Strategy

Baidu, often referred to as the Google of China, has experienced a significant increase in its stock value following the announcement of its ERNIE AI bot becoming free starting in April. This move by Baidu comes in response to the success of China's cost-effective DeepSeek AI bot, which has garnered attention globally. Analysts predict a rise in demand within China's AI sector, contributing to overall technological growth.

China's AI Moment

After several years of being overshadowed in the AI landscape, China's tech stocks are now taking center stage. Baidu's recent surge to a four-month high was triggered by the news of its ERNIE AI bot becoming freely accessible from April 1. The company's decision to offer this service for free is attributed to reductions in inference costs, particularly during the production phase of AI computing.

Market Response

Prior to the announcement, Baidu charged 59.9 yuan (approximately $8.20) per month for advanced versions of the ERNIE Bot. Following the news, Baidu's Hong Kong-listed shares experienced a notable increase of nearly 12%, eventually closing 5.7% higher. Year-to-date, the stock has shown a 13.7% increase in value.

Meanwhile, Baidu's Nasdaq-listed shares closed 4.4% higher at $93.34, reflecting a 10.7% rise since the beginning of the year. Other tech giants in China also saw positive movement, with e-commerce leader Alibaba gaining 2.6% in Hong Kong and 41.6% year-to-date. Alibaba's shares on the NYSE closed 4.9% higher at $118.33 and have seen an overall increase of nearly 40%.

Short video platform Kuaishou also experienced a 6.3% gain in Hong Kong trading, contributing to the overall positive sentiment in Chinese tech stocks. The Hang Seng Tech Index reached a near three-year high during the AI-fueled rally before retracting slightly to close 0.9% lower.

Implications for China's AI Sector

The recent surge in Chinese tech stocks underscores the potential impact of DeepSeek's cost-effective AI models on the country's AI sector. Analysts from Nomura highlighted the significance of DeepSeek's innovative approach, which has demonstrated high performance with limited computing resources. This development is expected to drive demand for domestic AI solutions, encompassing both hardware and software applications.

The success of Baidu and other tech companies in China signifies a promising period for the country's AI industry, with advancements in AI technology paving the way for future growth and innovation.

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By: htan@insider.com (Huileng Tan)
Title: Baidu Surges on Stock Market with New AI Pricing Strategy
Sourced From: markets.businessinsider.com/news/stocks/china-tech-baidu-shares-soar-ernie-ai-bot-free-deepseek-2025-2
Published Date: Thu, 13 Feb 2025 09:42:57 +0000