• 21/07/2024 08:45

Baidu shares collapsed on news of its chatbot being used by the Chinese military

Shares of the Chinese technology company Baidu plummeted on the back of news that its chatbot counterpart ChatGPT was used in the military sphere. This raised fears of potential sanctions against Baidu from the United States, Bloomberg writes.

Baidu shares collapsed on news of the use of its chatbot by the Chinese military

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Falling shares

At the minimum, the securities fell on the Hong Kong Stock Exchange by 12.02%, to 99.95 Hong Kong dollars ($12.78). This is the largest intraday drop in quotations in more than a year.

Earlier, the Hong Kong South China Morning Post reported that the research laboratory of the Strategic Support Forces, as it is called, tested its artificial intelligence system on Baidu's Ernie chatbot. a unit of the People's Liberation Army of China (PLA), which oversees issues related, including cyber warfare.

Read: Chinese Baidu is preparing to launch an analogue of ChatGPT

The next day, Baidu denied information about its affiliation or partnership with this research institute. “We know nothing about this research project, and if our LLM (the large language model that is used in the chatbot) was used, then it was a publicly available online version,” the company said in a statement.

The study referenced by the South China Morning Post was subsequently removed from the network. The newspaper itself changed its article, removing the reference to a “physical connection” between Ernie and the Chinese Armed Forces Research Institute.

Despite Baidu's denial, many in the market decided to get rid of its securities. Bloomberg Intelligence explained that the use of the Ernie chatbot by the Chinese military for its project in the field of AI could cause tension in relations with the United States and bring to the agenda the issue of the possibility of imposing sanctions against Chinese companies.

“In their statement Baidu has denied knowledge of this project. We remain cautious about Baidu's fundamental prospects and expect its core advertising business to come under increasing pressure in 2024 and its AI projects to continue to suffer losses,” commented Bloomberg Intelligence analyst Robert Lia. p>

The Hong Kong company UOB Kay Hian Hong Kong indicated that the market fears the risks of sanctions against Baidu. The sell-off is also being driven by general pessimism about China and its relationship with the United States.

“General sentiment toward China is weak and relations between the United States and China are still tense, so investors are immediately selling [stocks] regardless of whether whether the news is true or not,” said Steven Leung, executive director of UOB Kay Hian Hong Kong.


Baidu is considered one of the leaders in China in the development of AI-related technologies. In March 2023, the company began testing its chatbot Ernie, which is considered an analogue of ChatGPT. Over the summer, Ernie became available to a wide range of users.

Baidu reported that within a few months of its launch, the chatbot had 100 million users. The company claims that Ernie's capabilities are generally the same as those of GPT-4.

Baidu's chatbot has become a powerful driver of its stock prices – in early 2023, news of Ernie's imminent launch led to a stock jump of 18 %.


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