Updates to add Baidu 's clarification.
Investing.com-- Hong Kong shares of Baidu Inc (NASDAQ:BIDU) slid over 11% on Monday after reports linked the technology giant’s flagship Ernie artificial intelligence with the People’s Liberation Army, although the firm later denied any direct collaboration.
Baidu’s shares (HK:9888) closed 11.5% lower at HK$100.50, suffering their worst session since late-2022.
The broader Hang Seng index closed flat on Monday.
The South China Morning Post (SCMP), citing a recent research paper, reported that a laboratory associated with the People’s Liberation Army (PLA) Strategic Support Force had tested an experimental AI system using several large language models, including Baidu’s Ernie and peer IFlyTek’s Spark.
Baidu denied any business collaboration with the authors of the research paper, and said in a press release that it had not provided any specialized services to the testing.
The tech giant also clarified that Ernie was available for use by the general public, and that testing mentioned in the research paper was done through prompts available to any general user.
Baidu's Hong Kong shares were sold off heavily after the report, amid concerns that any potential affiliation with the PLA could attract sanctions from the U.S., especially as both countries explore military applications of AI.
Its U.S. shares did not trade on Monday, on account of a market holiday.
Baidu’s Ernie bot was the company’s answer to OpenAI’s ChatGPT, coming just a few months after the latter, amid a global push into large language models. Baidu had already begun monetizing the model by late-2023, logging stronger sales in the third quarter on revenue from its AI offerings.
Baidu’s Chinese peers Alibaba Group Holding (NYSE:BABA) (HK:9988) and Tencent Holdings (HK:0700) had also raced to release their own offerings in 2023.
But China’s AI aspirations face some headwinds, particularly from the U.S. banning the sale of key AI-linked chips to Chinese entities. NVIDIA Corporation (NASDAQ:NVDA), which is the poster-child of making chips for AI development, can no longer sell its latest chips in China.
Tencent and Alibaba had warned that the ban could potentially hamper their AI development efforts. China has also hit back against the ban with sanctions of its own.
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