Baidu rallies on plans to make its AI chatbot free

Investing.com -- Baidu’s shares jumped Thursday after the Chinese tech company announced that its AI chatbot, Ernie Bot, will be available for free starting April 1, citing advancements in technology and lower costs.

The service will be accessible at no charge to all users on both desktop and mobile platforms, the company said in a WeChat post.

Baidu (NASDAQ:BIDU) Inc (HK:9888) stock jumped more than 5% in Hong Kong, while its US-listed shares rose over 2% in premarket trading.

Baidu faces increasing competition in China’s AI market, particularly from DeepSeek, a startup offering free AI chatbot services that it claims rival the capabilities of OpenAI’s advanced systems while maintaining lower operational costs.

As one of the first Chinese companies to enter the AI space following OpenAI’s launch of ChatGPT in 2022, Baidu has struggled to achieve widespread adoption for its Ernie large language model. The company has asserted that its latest version, Ernie 4.0, is on par with OpenAI’s GPT-4.

In late 2023, Baidu rolled out premium search engine features powered by Ernie 4.0, priced at 59.9 yuan ($8.18) per month.

On Thursday, the Beijing-based technology giant also announced the launch of an advanced search function, which will also be made freely available from April 1, offering improved reasoning capabilities and better tool integration for more expert-level responses.

The AI space was disrupted last month after DeepSeek revealed a research paper claiming its AI model was trained at significantly lower costs than leading AI companies, using less-advanced Nvidia (NASDAQ:NVDA) chips.

The announcement triggered a sharp sell-off in tech stocks and fueled debate over whether major tech firms are overspending on AI infrastructure.

Google (NASDAQ:GOOGL) DeepMind CEO Demis Hassabis said on Sunday that DeepSeek’s AI model is “probably the best work” from China but argued that the company had not demonstrated any new scientific breakthroughs.