Baidu Plans Release of Next-Generation AI Model Amid Market Disruption

In a significant move within the artificial intelligence sector, Baidu, a leading tech company in China, is set to launch the next generation of its AI model in the latter half of this year. This development comes as new competitors like DeepSeek enter the market, challenging established players.

Sources indicate that the upcoming model, known as Ernie 5.0, is branded as a "foundation model" and is expected to feature major advancements in multimodal capabilities. Although specific functions have not been disclosed, "multimodal" AI refers to technology that can handle and transform various forms of data, including text, images, audio, and video. For example, it can convert text into video and vice versa.

Foundation Models and Their Potential

Foundation models like Ernie are capable of understanding language and executing numerous tasks, such as generating text and images, and facilitating natural language communication. Baidu's decision to update its AI model reflects the company's strategy to compete with U.S. giants like OpenAI.

Recently, the startup DeepSeek made headlines by releasing its open-source AI model, which reportedly impressed users with its reasoning abilities and offered lower operational costs compared to OpenAI's ChatGPT. This introduction of DeepSeek has sparked a reaction in global tech stocks, hinting at a rapidly evolving landscape.

Cost Reduction and Innovation

At the World Governments Summit in Dubai, Baidu's CEO, Robin Li, shared insights on the massive potential for reducing costs associated with foundation models. He revealed that inference costs could be slashed by more than 90% over the next year, leading to significant gains in productivity.

Li highlighted the connection between cost reduction and innovation, stating, "If you can reduce the cost by a certain percentage, then that means your productivity increases by that kind of percentage." This perspective underscores the ongoing changes within the industry.

Competitors in the Chinese Market

Baidu was the first prominent Chinese technology firm to introduce a ChatGPT-like bot, launching Ernie in March 2023. However, other AI chatbots developed by startups and major companies such as Alibaba and ByteDance have overshadowed Baidu's initial success.

As of now, Alibaba shares have surged by 33% in 2023, whereas Baidu's shares have only increased by 6%, and Tencent has gained about 4% this year. ByteDance remains privately held.

Baidu's Ernie model currently supports various applications of generative AI across its consumer and business platforms, such as cloud storage and content creation.

User Growth for Baidu's Platforms

Last month, Baidu reported remarkable growth for its Wenku platform, which is designed for creating documents and presentations. By the end of 2024, the platform reached 40 million paying users, marking a 60% increase from the previous year. Enhanced features allowing AI to generate presentations based on a company’s financial documents were launched earlier this year.

Recent Developments

The current version of Baidu's Ernie model, known as Generation 4, was released in October 2023. An upgraded version, Ernie 4.0, followed in August 2024. Although Baidu has not yet made an official announcement regarding the next-generation model, developments are highly anticipated.

In comparison, OpenAI recently released the latest version of its ChatGPT, GPT-4o, in May 2024. OpenAI CEO Sam Altman stated that there is no public timeline available for the release of GPT-5.

Baidu has not responded to requests for comments regarding these updates.

Baidu, AI, DeepSeek