Shares in Chinese search engine company Baidu (NASDAQ:BIDU) rose 5% Feb. 27 as it prepared to roll out a rival to OpenAI’s ChatGPT, a conversational chatbot based on artificial intelligence (AI). BIDU stock is up more than 1% today.
The program is called “Wenxin Yiyan,” or Ernie Bot in English. The launch is set for March 16 and uses a language model Baidu says it developed in 2019.
The company’s shares listed in Hong Kong rose 16% on the news. The stock opened in New York on Feb. 28 at about $139 per share with a market capitalization of $48.2 billion.
Age of Ernie
Ernie is an English-language acronym, which stands for “Enhanced Representation through Knowledge Integration.” But it is controversial.
The Chinese government is leery of the technology because it can’t control what Ernie, or models like it, might say in response to user input. Baidu’s chief strategy officer recently resigned, although Baidu insists it wasn’t over a disagreement on strategy.
Baidu is under strict government control. Anything users post, even short comments, is subject to review against an ever-lengthening list of banned topics.
In the U.S., a 1996 law called Section 230 ensures online services are not liable for what users post. However, the Supreme Court is considering a case that could weaken Section 230.
Baidu is up more than 18% in 2023, mainly on the strength of Ernie. The company has also authorized $5 billion in stock buybacks.
The other Chinese “Cloud Emperors” that own cloud data centers, Tencent (OTCMKTS:TCEHY) and Alibaba (NYSE:BABA), are working on their own AI chatbots. Tencent’s is called HunyuanAide, based on a Chinese word for chaos. Alibaba has not released a name for its version.
What Happens Next for BIDU Stock?
Last month’s decision by Microsoft (NASDAQ:MSFT) to launch OpenAI technology in its search engine and office suite launched a global gold rush. By the end of the year, the technology will be ubiquitous and may be difficult to control.
Tencent has the right name for it.
On the date of publication, Dana Blankenhorn held long positions in MSFT and BABA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.