baidu chatgpt rival

Baidu stock (NYSE: BIDU) is trading sharply higher in US premarket price action today. The company posted better-than-expected earnings for the fourth quarter of 2022 and also announced a $5 billion stock buyback.

Also, an internal memo showed that Ernie, its AI chatbot would be available from March only. Amid ChatGPT’s success, companies ranging from Alibaba to Google have announced rival offerings.

Baidu reported revenues of $4.80 billion in Q4 2022 which was similar to the corresponding quarter in the previous fiscal year. However, the metric was ahead of what analysts were expecting. The company’s net income almost tripled to $718 million in the quarter and came in ahead of estimates.

Baidu also announced a $5 billion stock buyback. Last year, Alibaba also enhanced its stock buyback program amid the slump in its stock price.

BIDU said that its autonomous ride-hailing service Apollo Go completed 561,000 rides in Q4 2022, which was 162% higher than the corresponding quarter in 2021. Notably, in late December Baidu started offering robotaxis during the night in Wuhan.

Baidu ended 2022 with total cash and short-term investments of $26.87 billion. Notably, Chinese tech companies scaled back their investments after the 2021 tech crackdown.

Now, with China signaling an end to the tech crackdown, companies are ramping up investments again. AI is one particular sector that is drawing interest from several Chinese tech companies.

Baidu Ernie Chatbot Would be Available from March

An internal note shows that Baidu is looking to launch its AI chatbot Ernie in March. In the note, Baidu CEO Robin Li said, “The integration of ERNIE Bot with Baidu Search will lead to a generational change in the search experience.”

He added, “AI technology has reached a tipping point and all industries will inevitably go through transformation.”

Several Chinese tech companies are launching ChatGPT-like service. Expressing optimism over its AI offering, Li said, “Baidu stands as the best example of the long-term growth of China’s AI market and is advancing at the forefront of this new wave.”

Google’s Bard Had a Disappointing Debut

Meanwhile, Google’s Bard, which is the company’s answer to ChatGPT-powered Bing, had a disappointing debut.

In a promotional video, while responding to the question, “What new discoveries from the James Webb space telescope (JWST) can I tell my nine-year old about,” Bard also said that it took the first pictures of any planet outside earth’s solar system, which is not correct.

After the botched debut, Alphabet stock lost $100 billion in market cap. Meanwhile, Wall Street analysts still believe that in the long term, Google Bard would get a lot better as the technology itself is evolving.

Wall Street analysts have a consensus buy rating on Alphabet stock. It was the second-best performing FAANG stock of 2022 even as it underperformed both the S&P 500 and Nasdaq Composite.

Baidu Sees AI as a Key Growth Driver

Coming back to Baidu, the company sees AI as a key growth driver. There is a list of companies that are a play on AI.

The macro-environment for Chinese tech companies has improved as the country has taken several measures to boost investment.

Most recently, China announced new rules for domestic companies looking to list overseas. The rules come two years after Didi’s ill-fated US IPO where the company was forced to delist within months of its listing.

Amid a slowing economy, China has given multiple hints that it is now looking for rapprochement with foreign investors as well as the country’s tech sector.

Recently, the China Banking and Insurance Regulatory Commission approved Ant Financial’s request to more than double its registered capital for the consumer unit.

Guo Shuqing, Communist party chief of the People’s Bank of China said that the institution would support private companies.

Baidu stock is up 23% so far in 2023 and looks set to add to its YTD gains today as markets give a thumbs up to its earnings and AI chatbot update.

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