Chinese internet giant Baidu’s (NASDAQ:BIDU) Ernie chatbot is now available to the public after the Chinese regulators approved its mass rollout. On Thursday, Beijing announced that artificial intelligence (AI) chatbots from Baidu, ByteDance, and a few other AI startups could make their bots available to the masses. This step will help companies improve their models and commercialize the technology, a Financial Times report stated.
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Baidu has released Ernie to anyone who has a Chinese phone number. The news made Baidu’s Ernie Bot the most-searched app on Apple’s (NASDAQ:AAPL) app store in China. The tech behemoth hopes to boost its business, especially advertising sales, from the bot’s popularity.
Commenting on the release, CEO Robin Li said that through the rollout, “Baidu will collect massive valuable real-world human feedback,” which will enable Ernie to work faster. A chatbot can be developed further only once more and more people work with it.
China’s Restrictions Hamper Progress
China has stringent rules regarding the use of technology. Hence, tech companies were required to get prior approval from Chinese regulators before publicly rolling out their software.
Notably, ByteDance was also allowed to release its own chatbot, Doubao, to the masses. Also, other firms, including SenseTime and Zhipu (backed by Meituan), were given the green light to roll out their chatbots.
China is under constant pressure to excel in the AI field, especially after the U.S. imposed bans on AI chip exports. Meanwhile, American tech giants, namely Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), continue to roll out newer and improved versions of their own chatbots, such as GPT-4.
Is Baidu a Good Buy Now?
Following the news of the public rollout of bots, some analysts shared their views. Bernstein analyst Boris Van believes that China is nearly “a year behind” the American chatbot revolution, owing to the late public rollout. Plus, they would continue to be impacted by the ban on advanced chips that are essential to train the large language models (LLMs) used for bots.
Van is also unsure whether the other versions, such as Ernie 3.5 or the Ernie Enterprise model, have been approved under the current approval. Nonetheless, Van reiterated his Buy rating on BIDU, with a price target of $160 (implying 12% upside potential).
Another analyst, Fawne Jiang of Benchmark Co., noted that the free availability will enable “incremental commercialization opportunities on ad or on fee-based services.” Many of Baidu’s products and services could get a lift from the successful adoption of Ernie as the chatbot becomes more intuitive. Jiang also has a Buy rating on BIDU stock and a price target of $210 (implying 47% upside potential).
Overall, on TipRanks, BIDU commands a Strong Buy consensus rating based on 11 Buys and two Hold ratings. The average Baidu stock price target of $183.15 implies 28.2% upside potential from current levels. Meanwhile, BIDU stock has gained 21.8% year-to-date.
