Why Baidu Stock Soared Higher Today

Shares of Baidu (NASDAQ: BIDU) are climbing on Monday. The company's stock gained 9.8% as of market close and was up as much as 9.9% earlier in the day. The strong performance comes as the S&P 500 lost 0.2% and the Nasdaq Composite fell 0.4%.

The Chinese tech giant announced the launch of two new powerful artificial intelligence (AI) models.

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Baidu makes a bold claim

Baidu announced on Sunday that it has released two new AI models: ERNIE 4.5 and ERNIE X1. The company stated that X1 delivers "the same performance as DeepSeek R1 at only half the price." That's a big deal as DeepSeek's R1, a rival Chinese model, rocked markets earlier this year when it was reported to have been trained for a small fraction of the price of its American counterparts.

X1 is a "deep-thinking reasoning model" that is capable of generating images, interpreting code, reading webpages and making advanced calculations, as well as other complex tasks.

Baidu is better positioned, but challenges remain

The company holds the third most patents related to AI of any company in the world and the new models represent an important step forward for a company that's invested so much in the technology. Baidu faces significant competition, however, both domestically and abroad. The company, which also runs China's latest search engine, has seen some weakness in its advertising revenue, a core part of its business. Still, Baidu is in a great position to take advantage of its AI innovations, self-driving technology, and cloud infrastructure.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Baidu. The Motley Fool has a disclosure policy.