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Jon Keegan

Baidu gets its own “reasoning” AI model

While DeepSeek’s fast, cheap, and open-source AI models may be getting all of the world’s attention, Baidu, one of China’s largest tech companies, is competing head-to-head with the smaller startup.

This weekend, Baidu released two new models: Ernie 4.5, its updated foundational model, and Ernie X1, a new “reasoning” model to compete with DeepSeek’s R1.

The company said Ernie 4.5 beat OpenAI’s GPT-4.5 on multiple benchmarks for “just 1% of the price,” according to a press release. Both models are free for individual users of the “Ernie Bot” chatbot.

Baidu is touting Ernie X1’s reasoning ability, but also its price:

“As a deep-thinking reasoning model with multimodal capabilities, ERNIE X1 delivers performance on par with DeepSeek R1 at only half the price.”

Baidu’s stock was up over 1% in early trading this morning.

The company said Ernie 4.5 beat OpenAI’s GPT-4.5 on multiple benchmarks for “just 1% of the price,” according to a press release. Both models are free for individual users of the “Ernie Bot” chatbot.

Baidu is touting Ernie X1’s reasoning ability, but also its price:

“As a deep-thinking reasoning model with multimodal capabilities, ERNIE X1 delivers performance on par with DeepSeek R1 at only half the price.”

Baidu’s stock was up over 1% in early trading this morning.

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Digging into Microsoft’s cloud backlog

Microsoft’s Azure cloud computing unit is seeing huge demand. In yesterday’s second-quarter earnings call, Microsoft CFO Amy Hood said the company’s commercial bookings increased 230% thanks to large commitments from OpenAI and Anthropic and healthy demand for its Azure cloud computing platform.

Hood said that the company’s “remaining performance obligations” (RPO) ballooned to a staggering $625 billion, up 110% from the same period last year. How long will it take for Microsoft to fulfill these booked services? Hood said the weighted average duration was “approximately two and a half years,” but a quarter of that will be recognized in revenue in the next 12 months.

Shares of Microsoft tanked today, down over 11%, despite the strong beat on revenue and earnings. Investors may be concerned that while huge, that extra demand was coming only from OpenAI, an issue that Oracle recently experienced.

But Hood said the non-OpenAI RPO still grew 28% year on year, which reflects “ongoing broad customer demand across the portfolio.”

US-ART-BASEL

Meta and Tesla are funding the future with their core businesses — but only one of them is still growing

The two tech giants, on back-to-back earnings calls, made it sound like they’re selling the same AI-powered future. But the picture of the underlying businesses, and how they’re using AI to furnish current sales, couldn’t be more different.

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