Baidu has released a new AI reasoning model which the Chinese tech giant says has capabilities rivaling DeepSeek but at a lower cost. U.S.-listed Baidu stock gained in Monday trading.
The Beijing-based internet search giant on Sunday announced the launch of its Ernie X1, a "deep-thinking reasoning model" the company says is capable of AI image generation, interpreting code, reading webpages and complex calculations, among other abilities. It delivers performance "on par with DeepSeek R1 at only half the price," according to a news release from Baidu.
The announcement marks the latest twist in an intense competition between Chinese tech giants and startups to develop the top AI model in the country. Chinese startup DeepSeek shook up the stock market in January by releasing a high-performing large language model at what is said was a significantly lower development cost compared to industry leaders such as OpenAI. Alibaba, meanwhile, is spending billions on its AI push and revealed a new more powerful AI agent late last week. An AI chatbot tool called Manus AI that was developed by a Chinese startup is capturing attention in the tech world as well, though it is still in a limited preview phase.
Baidu also announced Ernie 4.5, an update to its larger foundational AI model. The model power the Ernie AI chatbot, which Baidu is making available to users for free ahead of schedule, Baidu announced.
Baidu Stock Up 11% In 2025
On the stock market today, U.S.-listed Baidu stock is up 1.8% at 95.51 in recent premarket trades.
Baidu's operations include China's top internet search engine, a cloud services business and a self-driving car division.
Baidu's U.S. shares have gained 11% so far this year — rebounding off a low after a multiyear slide. But the stock has bounced back quite as strong as some China tech peers that trade in the U.S. U.S.-listed Alibaba stock is up more than 65% year-to-date entering Monday trading. Gaming and social media leader Tencent Holdings has gained 27% year-to-date for its U.S. shares, which trade over-the-counter.
Baidu shares fell in February after the company released fourth quarter earnings report, which showed continued weakness for advertising revenue the company relies on.
But Baidu stock has a so-so IBD Composite Rating of 79 out of best-possible 99, according to IBD Stock Checkup.
Baidu shares, meanwhile, show a 21-day ATR of 4.5%.
The average true range is a metric available on IBD's MarketSurge charting tool. It gauges the characteristic breadth of a stock's movement. Stocks that tend to make large jumps or dives in daily action have a high ATR. Stocks that tend to make more gradual moves have lower ATRs. In a volatile market, IBD suggests stocks with ATRs of 3 or below.
