The company's recent situation

We were invited to Baidu World Congress 2024. At the conference, Baidu Chairman and CEO Li Yanhong reviewed the industry's achievements in the past two years of rapid development of big models, shared Baidu's strategy for developing smart devices and in-depth industry exploration in the application of big models, and releasing enhanced search “iRAG” technology (iRAG) and codeless tools. Li Ying, CEO of Xiaodu Technology, announced the launch of “Xiaodu AI Glasses”, the first native AI glasses equipped with a large Chinese model. In addition, Baidu CTO Wang Haifeng explained the latest technology and applications of the Wenxin Big Model, and Shen Diu, President of Baidu Smart Cloud Business Group, shared the recent situation of Baige AI Heterogeneous Computing Platform 4.0 and Qianfan Big Model Platform 3.0.

reviews

The Wenxin Big Model application ecosystem is developing rapidly, and Baidu focuses on smart devices and industrial applications. As of the beginning of November 2024, the average daily call volume of Baidu Wenxin's big model has exceeded 1.5 billion, an increase of 7.5 times compared to half a year ago. Wenxin said that users are 0.43 billion, indicating that demand for large model applications is strong. 1) Baidu believes that smart devices are the mainstream form of AI applications, and are new carriers of content, information and services in the AI era. Currently, the Baidu smart platform has attracted 0.15 million enterprises and 800,000 developers. It can be divided into corporate intelligence, character intelligence, tool intelligence, industry intelligence, etc. Among them, the “free canvas” tool jointly released by Baidu Library and Baidu Netdisk integrates various information channels to generate diverse content, which is worth paying attention to. 2) Judging from the cooperation of large enterprises, Baidu uses the Smart Cloud Qianfan Big Model Platform to carry enterprise needs. Currently, the number of large models refined on the platform exceeds 0.033 million, and 0.77 million enterprise-level applications are developed.

From technology to application, Baidu explores diverse ways to present large models. 1) Combined with Baidu's billion-level image search and Wenxin's big model, Baidu's enhanced Wenshengtu technology iRAG has characteristics such as no illusion, accessibility, hyperrealism, and low cost. It can be applied to e-commerce advertising, content production, etc., and is gradually moving towards multiple modes; 2) The company releases software “seconds click” that can achieve any idea without writing code. The company expects to release the product in 1Q next year; 3) Xiaodu AI glasses are Baidu's combination of big hardware and side models. The product is shot from a first perspective, It has functions such as asking while walking, knowledge encyclopedia, audiovisual translation, and smart memos. It weighs only 45 grams, has a standby time of 56 hours, and supports continuous listening for more than 5 hours. The company expects Xiaodu AI glasses to be officially launched in the first half of 2025.

The application implementation in the big model industry has fallen short of market expectations both at home and abroad. We believe that Baidu is the leader in big model technology in China. Currently, it is building the foundation for the development of big model applications by investing in smart devices and going deep into the industry. This time, it is also taking the lead in launching AI eyewear hardware products and setting an example to lead the development of the industry. We continue to be optimistic about Baidu's differentiated competitive advantage in the big model direction.

Profit forecasting and valuation

We maintain revenue and profit forecasts, and maintain outperforming industry ratings and target prices.

risks

New business expansion fell short of expectations, cost reduction and efficiency fell short of expectations, and regulatory risks.