Hong Kong, China - A wave of excitement rippled through the Chinese tech sector after reports surfaced of a potential collaboration between Baidu, the nation's leading search engine, and Apple, the global tech behemoth. This buzz surrounding a possible artificial intelligence (AI) partnership sent Baidu's shares skyrocketing in Hong Kong.
The Wall Street Journal ignited the speculation last week, reporting that Apple had initiated preliminary discussions with Baidu regarding the utilization of its cutting-edge AI technology. This news ignited a firestorm, further stoked by Monday's report from Chinese media outlet Cailian Press. Their bombshell claim positioned Baidu as Apple's potential "local generative AI model provider" for a trifecta of Apple products: the highly anticipated iPhone 16, the ubiquitous Mac computer operating system, and the upcoming iOS 18 mobile operating system.
Fueled by these tantalizing rumors, Baidu witnessed a remarkable 5.4% surge in its share price on Monday. This positive performance stood in stark contrast to the broader Hang Seng Tech Index, which experienced a slight dip of 0.2%. While both Baidu and Apple have remained tight-lipped, refusing to comment on the speculation, the market has spoken volumes through its reaction.
Before any AI model can be unleashed on the public in China, it must first navigate the rigorous approval process overseen by the nation's regulators. Baidu's Ernie Bot, a powerful generative AI model, is among the select few – exceeding 40 models – to have already secured this crucial green light.
Analysts are unanimous in their belief that a partnership with Apple would be a game-changer for Baidu. Jialong Shi, a prominent analyst at Nomura, stated to Dow Jones Newswires, "If this collaboration materializes, it would be a perfect branding campaign for Baidu and its AI product, Ernie Bot." An endorsement from Apple would undoubtedly propel Baidu to the forefront of the AI race in China, especially considering the absence of leading international contenders like OpenAI's ChatGPT and Google's Gemini within the Chinese market.
Baidu's unwavering commitment to AI development has not only impressed analysts but has also surpassed initial expectations. Ann Romain, an analyst at the Zephirin Group, highlighted the company's "faster-than-anticipated monetization" of its AI ventures in a recent research note. This sentiment resonates with Baidu's CEO, Robin Li, who confidently predicted that the company's AI cloud businesses would emerge as a dominant revenue driver in 2024, projecting a sharp rise to "several billion yuan."
Analysts believe a partnership with Apple would unlock further avenues for Baidu to monetize its AI initiatives. John Choi, an analyst at Daiwa, emphasized the importance of this potential collaboration, stating, "The recognition from a global tech powerhouse like Apple would provide Baidu with the competitive edge it needs to maintain its leadership position within the Chinese market." Nomura's Shi echoed this sentiment, highlighting the potential for Apple's endorsement to elevate Baidu above its domestic rivals.
While the official confirmation of an Apple-Baidu AI partnership remains elusive, the rumors have ignited a powerful spark in the Chinese tech landscape. If this collaboration comes to fruition, it could significantly reshape the AI landscape in China, propelling Baidu to a new level of prominence and potentially altering the competitive framework within the global AI race.
