Baidu Inc shares climbed in Hong Kong after billionaire founder Robin Li said it will soon launch a new version of the large-language model powering its ChatGPT-style service. 

The shares rose as much as 6% before trimming as chief executive officer Li said that the model will be used to upgrade the technology behind its suite of artificial intelligence (AI) products, including the ChatGPT-like Ernie Bot. Other AI stocks including SenseTime Group Inc and Meitu Inc gained at least 3% each.

“Large-language models will give birth to AI-native applications,” Li said in a Beijing event, according to a transcript provided by the company. “Baidu will become the first company to rework all of its products. It’s not about integrating or accessing AI. It’s about rework and restructuring.”

Baidu shares have had a rough ride this year, as a rally driven by the hype ahead of Ernie’s demo launch in March faltered on disappointment. The latest development, if successful, could add impetus to the shares and help the firm ride on a renewed global AI frenzy, after Nvidia Corp’s surprisingly strong revenue forecast.

“Investors have been waiting for an update on Ernie Bot. Also the AI frenzy has spread to Chinese markets on Monday (May 29) after Nvidia’s good results,” said Steven Leung, an executive director at UOB Kay Hian. Hong Kong markets were closed last Friday.

Even with Monday’s gains, Baidu shares were down more than 25% from a February high as its chatbot - China’s first answer to ChatGPT - failed to match high expectations. 

The Chinese internet giant debuted Ernie Bot through several pre-recorded videos in March, defying expectations for a real-time demo, and later delayed a press briefing planned to showcase how the chatbot will be integrated into cloud computing service. Investors have also questioned Baidu’s ability to launch a Chinese language AI model.   

Baidu was one of the best performers on the Hang Seng gauge of Chinese tech shares, which reversed a 1.6% rise. Baidu shares pared its advance to less than 3% as of 1.07pm in Hong Kong. 

Ernie Bot is currently only available to selected users. Chinese regulators have said that any generative AI services would need their approval before rolling out in the world’s largest internet arena.

Last Friday, Li said countries with AI technology should work together and formulate rules to prevent it from getting out of control, joining calls from peers OpenAI Inc and Alphabet Inc’s Google for more oversight of the nascent sector.

  - Bloomberg