Baidu’s (NASDAQ:BIDU) stock fell about 4% premarket on Tuesday despite Citi analysts noting that market likely overreacted to a Jan. 12 news report linking the use of the company’s AI platform Ernie by a research laboratory affiliated with the Chinese military.
The company’s shares had slumped about 11% in Hong Kong on Monday.
The South China Morning Post’s report, citing a research paper, noted that a research laboratory with the People’s Liberation Army’s, or PLA, Strategic Support Force — which oversees the Chinese military’s space, cyber, intelligence and electronic warfare — tested its AI system on Baidu’s Ernie and iFlyTek’s Spark, which are large language models, or LLMS similar to OpenAI’s ChatGPT.
Baidu said in a press release on Monday that “ERNIE Bot is available to and used by the general public. The academic paper, published by scholars at a Chinese university, described how the authors built prompts and received responses from LLMs, using the functions available to any user interacting with generative AI tools. Baidu has not engaged in any business collaboration or provided any tailored service to authors of the academic paper or any institutions with which they are affiliated.”
Analysts at Citi Research noted that since the university is affiliated with the PLA, and the research studied battlefield situations and how to use AI to detect and predict changing battlefield conditions, among other things, they think the market perceived a potential risk that Baidu could face an overhang from any association/cooperation with Chinese military entities.
Amid fragile market sentiment, the analysts think the market likely overreacted to the news article.
Companies around the world are developing their own LLMs. Meta Platforms’ (META) Emu Video, Emu Edit, AudioCraft, SeamlessM4T, and Llama 2, Alibaba’s (BABA) Tongyi Qianwen 2.0 and Tongyi Wanxiang, Baidu’s (BIDU) Ernie Bot, OpenAI’s text-to-image tool DALL·E 3, Alphabet (GOOG) (GOOGL) unit Google’ Bard, Samsung’s (OTCPK:SSNLF) Gauss, and Getty Images’ (GETY) model called Generative AI by Getty Images, are some of the LLMs, among the many, being developed.