(Bloomberg) -- Baidu Inc. has unveiled its latest plans to stake out a spot in the burgeoning field of artificial intelligence, including a partnership with Nvidia Corp. to develop driverless cars and taxis and a home gadget akin to Amazon.com Inc.’s popular Echo.
Chief Executive Officer Robin Li is banking on its growing AI expertise to jumpstart a slowing search and advertising business, while one-upping rivals Tencent Holdings Ltd. and Alibaba Group Holding Ltd. The advent of all-pervasive AI will be the single most important development for the global internet sector, the company founder told investors, employees and analysts gathered at Thursday’s Baidu World conference in Beijing. The tag line for this year’s confab: “AI is the new electricity.”
AI has become a strategic area of investment for technology companies including Apple Inc. and Google. The bet is that whomever makes the most engaging digital personal assistants and software will control the layer between users and their digital lives, profiting off that relationship. Baidu was a latecomer to areas such as ride-sharing and financial technology but it enjoys a first-mover advantage in AI, President Zhang Ya-qin told Bloomberg News.
“AI is one thing that Baidu started before all of the competitors. And mobile search, we have more advantage, more dominance than competitors,” he said on the sidelines of the conference. “AI is our opportunity and we’re pretty fortunate the world is coming to this stage. We need to be patient.”
The company’s shares jumped 3.2 percent, chalking up their biggest gain in about two months. Jefferies & Co. analyst Karen Chan reaffirmed her buy rating on Baidu in a research note, citing the various AI-related initiatives showcased at Baidu World.
Baidu will be more focused in picking its investments than previously, when it was throwing off cash to try and grab market share from Tencent and Alibaba in on-demand internet services, Zhang said.
“As a company, we’re not going to burn money like before,” he added. “It was not only us, it was the mode of the Chinese at that stage of the internet.”
Baidu, the smallest of China’s internet triumvirate, is trying to position itself for growth as its search business begins to plateau, partly due to regulatory constraints. Apart from investing in its online media service iQiyi, the company considers AI development to be fundamental to its future. But it could be looking at a very long-term horizon.
“It will take years before the technology is mature enough for monetization,” JPMorgan analysts led by Alex Yao wrote this week. “So far, there is still a lack of visibility on the prospects for these initiatives, and the search business should continue to remain the sole pillar for the company in the next few years.”
Artificial intelligence enables products such as personal assistants, including Google Now and Amazon’s Alexa. It helps Baidu target advertising. And it makes new product categories possible, from autonomous cars to new models for entertainment in virtual reality.
Baidu on Thursday outlined some of its plans for AI, both short-term and long-term. By working with speaker-maker Harman International Industries Inc., it wants to create a smart device that, like Amazon’s Echo, can understand spoken commands and order food or summon cars.
The Chinese search giant is also trying to exert its own influence on the rapidly deepening field. It will release its “ PaddlePaddle” software on GitHub Sept. 30, letting AI enthusiasts freely make use of the development tools. The move resembles Google’s release of TensorFlow in an attempt to set the standard on AI programming.
By combining its ability to crawl the web, deep understanding of hundreds of millions of Chinese users and facial and voice recognition technology, Baidu plans to create detailed profiles of every person. This in turn can be used to develop products and market services. The company demonstrated a sales call that turned the thick Beijing accent of one customer into text in real-time.
Autonomous cars is another area the company is making a big bet on. Baidu thinks driverless vehicles will become a commercial reality in coming years and, like other major technology companies, is already testing prototypes. The company successfully completed an autonomous test drive around Beijing in December, and just this week the California Department of Motor Vehicles issued Baidu USA an autonomous vehicle testing permit. Nvidia, a maker of computer microchips for graphics, and Baidu will build operating software for self-driving that encompasses mapping and adapts to changing environments.
Baidu has already made believers of some in the investment community. HSBC analysts led by Chi Tsang on Wednesday raised their target price to $200 per share, based in large part on expectations that the company can turn its data into profits using the technology.
“As investors begin to recognize the long-term potential of AI we expect the stock to re-rate,” they wrote.
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