China’s answer to ChatGPT, Ernie Bot, can answer all kinds of difficult user questions. To investors, it is the answer to the slowing growth its maker Baidu has faced. But a plunge in the shares of the Chinese search giant on Monday reflects how fragile the local tech sector is.
Shares of Baidu fell 12 per cent, the most in over a year, after a report linked its Ernie artificial intelligence platform to key Chinese military research. The report claimed an institute affiliated with a unit of the People’s Liberation Army, which oversees cyberwarfare, had tested its AI system on Ernie. Baidu denied any affiliation or partnership with the institute and said it had no knowledge of the research project.
Nonetheless, the outsized sell-off reflects two concerns. The first is how important Baidu’s chatbot has become to its future earnings. The second is just how much of that earnings outlook is currently subject to US influence.