By Kimberley Kao

Shares of Baidu surged after the Chinese tech giant announced plans to make its popular ChatGPT-style artificial intelligence chatbot available for free starting April 1, amid growing competition in China's rapidly expanding AI market.

Baidu's Hong Kong-listed shares climbed as much as 12% on Thursday, putting it on track for its largest one-day gain in nearly two years, compared to the Hang Seng Index's 2.6% increase in afternoon trading.

In a WeChat post, the Beijing-based company stated that it would offer its Ernie AI chatbot at no cost to both desktop and mobile users, citing advancements in technology and ongoing cost-cutting efforts.

Baidu additionally launched a deep search function, which will also be free to use from April 1. The function is designed to handle more complex tasks with enhanced reasoning capabilities.

Originally a search-engine company, Baidu became the first in China to launch a ChatGPT equivalent, the Ernie Bot, in 2023.

Baidu's technology chief stated in November that the model had amassed 430 million users.

However, Baidu, along with other players in China's AI sector, is facing increased competition, particularly from DeepSeek.

DeepSeek made waves earlier this year when it revealed it had trained AI models that delivered high performance at a low cost, without relying on the most advanced chips.

Baidu's share price movement reflects "capturing momentum that everything AI in China is leading people to believe that the platforms offering these models will become more popular," according to Morningstar Asia equity market strategist Kai Wang.

"As people shift to imitate DeepSeek methods, the costs to train the model will decrease and may be reflected in their fundamentals with better cash flow," he said.

Noting that Baidu's announcement is not a surprise as it has not yet materially monetized its model for personal use, Wang said the move aims to garner "greater traction to its platform for both advertising and enterprise customers."

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

February 13, 2025 02:09 ET (07:09 GMT)

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