The Artificial intelligence race is heating up as firms work round the clock to develop groundbreaking innovations and models expected to shape the human race. Just weeks after Chinese startup DeepSeek rattled Wall Street with a cost-efficient AI model, another tech giant plans to shape the landscape. Baidu (BIDU) is the latest Chinese tech giant to fire warning shots with the release of a next-generation artificial intelligence model.
Baidu “Foundational Model”
The Chinese internet giant has confirmed plans to release Ernie 5.0 ‘foundation model’ in the second half of the year. The new model will come with significant enhancements in multimodal capabilities. The model should be able to process text, video, images, and audio to combine them and convert them across categories such as text to video and vice versa.
The integration of generative AI into a variety of Baidu’s business-facing and consumer products, such as cloud storage and content production, is already supported by the company’s Ernie model.
Foundation models are becoming increasingly popular due to their ability to understand language and perform various tasks such as text and images. In addition, the models can communicate in natural language.
The anticipated update from Baidu comes as Chinese businesses scramble to create cutting-edge AI models in order to compete with OpenAI and other American firms. With the release of its open-source AI model in late January, the Hangzhou-based startup DeepSeek caused a global sell-off in tech stocks.
Users were impressed by the model’s reasoning capabilities and claimed that it could significantly lower the cost of OpenAI’s ChatGPT. Baidu became the first significant Chinese tech company to release Ernie, a chatbot that resembled ChatGPT. Nevertheless, despite its early success, the product has since been overshadowed by other Chinese AI chatbots developed by startups and big tech firms like ByteDance and Alibaba.
$325B AI Spending
Meanwhile, US tech giants will remain on a spending spree to gain an edge, even on Chinese startup DeepSeek, which shows that it is possible to develop cost-effective AI models. Meta Platforms (META), Microsoft Corporation (MSFT), Amazon (AMZN), and Alphabet’s Google (GOOGL) will spend upwards of $325 billion as part of their commitments to building out artificial intelligence infrastructure.
The proposed $325 billion in AI spending will mark a 46% increase from the $223 billion companies spent last year. With $78 billion for 2024, Amazon is by far the group’s largest capital investment spender, surpassing both Alphabet’s $53 billion and Microsoft’s $56 billion. Meta revealed that it would invest $60 billion to $65 billion in 2025, a significant increase from the $38 billion to $40 billion it had previously told investors it would spend that year.
Tech behemoths argue that all of this investment will eventually pay off. The remarks come as investors remain less certain. Concerns during recent earnings periods have been heightened by the lack of clarity surrounding the payoff timeline and the ongoing discussions about whether such high levels of spending are actually justified. Additionally, the companies’ larger-than-anticipated investments for the next year coincide with investors’ scrutiny of Big Tech’s substantial expenditures on artificial intelligence.
