Baidu’s Latest Version of Ernie 4.0 Impresses Analysts, But Investors Remain Skeptical

Impresses Analysts, But Investors Remain Skeptical

Baidu Unveils Ernie 4.0, an Advanced AI Model, But Investors React Negatively

Baidu, the Chinese tech giant, has recently launched its latest generative artificial intelligence model, Ernie 4.0, which has received a lot of positive feedback from industry analysts. Despite this, investors did not seem to share the same level of enthusiasm about this development. Citi analysts, in their report, expressed their positive outlook, highlighting the official launch of Ernie 4.0 along with the announcement of various new products. They maintained a “buy” rating with a target price of $182, indicating their confidence in the company’s future growth prospects.

During Baidu World 2023, CEO Robin Li highlighted the significant enhancements of Ernie 4.0, stating that it is the most powerful version to date. He demonstrated its capabilities, including the real-time composition of a martial arts novel, the creation of advertising materials, the planning of a trip itinerary, and the solving of complex math problems.

Ernie 4.0’s enhanced capabilities have been well-received by Jefferies analysts who have praised the training algorithm’s 3.6x improvement. The analysts have maintained a “buy” rating for the model, and set a price target of $216. In comparison to OpenAI’s GPT-4 model, Ernie 4.0’s performance has been deemed satisfactory by the analysts.

Baidu announced ERNIE 4

Baidu, the Chinese tech giant, has made a significant achievement by claiming that their latest model of Ernie, Ernie 4.0, is now as capable as GPT-4. Ernie 4.0 is now on par with GPT-4, which is a noteworthy milestone for Baidu.

Baidu first released Ernie 3.0 on March 16 to a limited pool of users. The company launched version 3.5 in June, outperforming ChatGPT and GPT-4 in several key areas. It received government approval and opened access to the public on August 30.

KraneShares’ Head of International, Xiaolin Chen, views Baidu’s recent accomplishment as a major milestone in the field of AI. However, Chen stresses that the effectiveness of AI models is highly dependent on the specific use case and task at hand. Therefore, in order to fully assess the capabilities of Baidu’s AI models, a comprehensive comparison with other models across a diverse range of applications would be necessary.

Investor sentiment down

Baidu’s recent announcement, despite receiving positive feedback from analysts, has failed to impress investors. The company’s Hong Kong-listed shares closed 1.65% lower on Tuesday, underperforming the Hang Seng Index, while its Nasdaq-listed shares also registered a decline of 4.12%. The investors continue to harbor concerns about the long-term issues such as the impact of chip sanctions on Baidu’s AI business and other potential risks that could thwart its growth trajectory. Interestingly, these apprehensions were not addressed by Baidu’s CEO Robin Li during the conference. In his report, Kai Wang, Senior Equity Research Analyst at Morningstar Asia, points out the lack of new guidance for the business.

The development of large language models such as ChatGPT and Ernie relies heavily on high-performance memory chips that can store details from past conversations and user preferences. However, the recent U.S. ban on exports of AI chips, including Nvidia H800, to China has raised concerns about Baidu’s future business prospects. The new rules, aimed at limiting China’s access to high-tech semiconductor chips, are driven by the fear that these chips could be used for military purposes.

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