Chinese tech giant Baidu (BIDU) is set to launch its advanced generative AI (artificial intelligence) model Ernie 5.0 in the second half of 2025 to rival DeepSeek’s R1 model. CNBC was the first to report the news, citing sources familiar with the matter. The report said that Ernie 5.0 will be a foundation model and have multimodal capabilities such as the ability to communicate in natural language.
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Sources have also said that Ernie 5.0 will have “big enhancements in multimodal capabilities.” Thus, implying that the model will be able to process text, audio, video, and images to produce the results. Plus, it will enable conversion across formats such as video to text, audio to image, and so on.
Baidu Faces Intense Competition in China and the U.S.
At the recent World Governments Summit in Dubai, Baidu CEO Robin Li stated that he believes the inference cost of foundation models could be cut by 90% over 12 months. Inference cost is the expense associated with training a machine learning model on new data sets to generate predictions. Li added that by reducing costs, one can increase the productivity of the model, which is the very nature of innovation. The exact details of Ernie 5.0 remain unavailable at the moment, but Li’s commentary implies that Baidu could likely be on the way to reducing the operational costs of its model.
Baidu’s last upgrade to the current model, Ernie 4.0, was released in August 2024. The current Ernie 4.0 model already integrates generative AI in a host of Baidu’s products, such as cloud storage and content creation, among others. Despite being one of the first models launched in 2023, following OpenAI’s ChatGPT, Baidu’s large language model (LLM) has failed to garner as much attention as those of rival Chinese companies. For instance, Ernie faces stiff competition in China from ByteDance’s Doubao and Alibaba’s (BABA) Qwen family of models.
DeepSeek’s abrupt launch of the cheaper R1 model in January shook the AI world. Since then, tech companies have been competing to launch higher versions of their AI models with advanced capabilities. Furthermore, the rivalry between the U.S. and Chinese tech companies to showcase their dominance in the AI segment has grown more intense and continues to rattle the markets.
Is BIDU a Good Buy?
Analysts remain divided on Baidu stock owing to stiff competition. On TipRanks, BIDU stock has a Moderate Buy consensus rating based on nine Buys and six Hold ratings. The average Baidu price target of $106.71 implies 19.3% upside potential from current levels. In the past year, BIDU stock has declined 16.2%.
