What's Going On With Chinese AI Stocks Alibaba, Baidu On Tuesday?

Alibaba Group Holding BABA, Baidu Inc BIDU, and other peers are amid a price war as they slash the prices of their latest AI models to compete with China’s domestic AI startups.

As Chinese artificial intelligence startups, like Baichuan AI, race to secure customers, they face intense competition from tech giants offering significantly lower prices.

At a recent exhibition in Shanghai, Baichuan AI showcased its advanced healthcare chatbot powered by its latest large language model, Baichuan4.

The startup claims that Baichuan4 outperforms OpenAI’s GPT-4 in certain areas, Nikkei Asia reports.

Also Read: China’s AI Leaders Alibaba and SenseTime Showcase Breakthroughs at Shanghai Conference

Despite its advanced capabilities, Baichuan AI faces a tough market, with its 100 yuan ($13.75) per 1 million tokens price being comparable to OpenAI’s GPT-4 but higher than domestic alternatives.

Alibaba and Baidu have slashed prices to as low as 0.5 yuan, making it challenging for startups to compete.

China’s government supports AI development, approving 117 generative AI models and setting up investment funds. Wang Xiaochuan, Baichuan’s CEO, views price competition positively, believing it will lead to broader adoption of AI technologies.

However, Zhang Peng, CEO of Zhipu AI, warns that excessive price cuts are unsustainable, potentially harming the market in the long run.

Alibaba stock lost 19% in the last 12 months as the company struggles to unlock value through its AI and e-commerce endeavors in a challenging domestic market. Baidu lost over 38%.

Investors can gain exposure to Alibaba stock via Avantis Emerging Markets Equity ETF AVEM and Global X Artificial Intelligence & Technology ETF AIQ.

Price Actions: BABA shares were trading higher by 0.64% at $73.97 in the premarket session at the last check Tuesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy Alibaba