Baidu: AI chip reserves are sufficient to support the upgrade of "Wenxin Yiyan"

Baidu: AI chip reserves are sufficient to support the upgrade of "Wenxin Yiyan"

Wenxin's inference cost has been reduced to 1% of the initial version, bringing an increase of several billion yuan in revenue this year.

This year, Baidu's incremental revenue from generative AI and foundational models will reach several billion yuan.

On February 28, Baidu released its financial report for the fourth quarter and the full year of 2023, with a total revenue of 134.598 billion yuan for the year, a year-on-year increase of 9%; Baidu's net profit (non-GAAP) was 28.7 billion yuan, with a year-on-year growth rate of 39%; the fourth-quarter revenue was 34.951 billion yuan, a year-on-year increase of 6%, and Baidu's net profit (non-GAAP) was 7.755 billion yuan, a year-on-year surge of 44%. In 2023, Baidu's annual revenue and profits exceeded market expectations.

In the subsequent earnings call, analysts continued to focus on the growth potential of Baidu's AI business and the impact of US AI chip sanctions on Baidu's AI development.

Baidu's founder, chairman, and CEO Robin Li stated that since its release, Baidu has been continuously reducing the inference cost of the Wenxin large model, which has now been reduced to 1% of the version from March last year. With the reduction in inference cost, more and more users and enterprises have started to use the Wenxin large model. "In 2024, generative artificial intelligence and foundational model business will bring us an increase of several billion yuan in revenue, which will also have a positive impact on our total revenue."

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In addition, Robin Li reiterated that in the short term, the impact of US chip export restrictions on Baidu is minimal.

Robin Li said, "Currently, the chips we have on hand are sufficient to support the upgrade of 'Wenxin Yiyan' 4.0 to a higher level. As we mentioned earlier, we hope to continuously iterate 'Wenxin Yiyan' in a 'product application' manner, guided by user needs, and improve and adjust our model by collecting user feedback. Of course, the direction of its iteration can be multimodal, agency, enhancing reliability, and so on."

On the question of whether Baidu has found alternative chips for artificial intelligence, Robin Li stated that Baidu currently has the strongest foundational models in China, and our AI chip reserves are sufficient to support the iteration and upgrade of "Wenxin Yiyan" for the next one to two years. As for model inference, the chip functions involved do not need to be too powerful, and the chips we have on hand as well as the existing chips on the market are enough to meet our needs."We believe that an efficient domestic software stack can also ensure that the user experience remains unaffected. We believe that Baidu's strong R&D team, equipped with relatively advanced chips and efficient model training and inference, can give us a unique competitive advantage. We believe that over time, businesses and developers will gradually realize that building programs on 'Wenxin Yiyan' will be one of the best ways for them to embrace the artificial intelligence era."

Large models bring about 660 million yuan in incremental revenue to cloud business

AI has become a new growth driver for Baidu. Financial reports show that in the fourth quarter, Baidu's core revenue was 27.5 billion yuan, a year-on-year increase of 7%, exceeding the market expectation of 27.31 billion yuan. Among them, online marketing revenue was 19.2 billion yuan, a year-on-year increase of 6%, and non-online marketing revenue was 8.3 billion yuan, a year-on-year increase of 9%, mainly due to the intelligent cloud business.

Regarding whether it is possible to quantify or prove that the advertising revenue Baidu will generate is purely from the incremental contribution of AIGC, rather than internal competition with existing search business, Robin Li said that Baidu has nearly 700 million monthly active users, and the advertising business covers various different vertical fields. Macro factors still have uncertainties, but generative AI and large language models are opening up new opportunities for the company. It is easier to quantify in terms of profitability, and it is relatively difficult to quantify the impact on user engagement.

In terms of Baidu's intelligent cloud, Baidu estimated in a conference call that the growth of cloud business revenue in 2024 will accelerate, surpassing last year's growth. For enterprise cloud, it can continue to improve gross margin, and for large model business, the market is still in the early stages of development. Therefore, Baidu will adopt a very dynamic pricing strategy to quickly educate the market and expand the penetration rate of enterprise customers.

Robin Li revealed in the conference call that Baidu's intelligent cloud's total revenue in the fourth quarter was 8.4 billion yuan, of which large models brought about 660 million yuan in incremental revenue to the cloud business. The daily usage of the Wenxin large model has exceeded 50 million times, a 190% increase quarter-on-quarter. In December last year, about 26,000 enterprises used the Wenxin large model through API, a 1.5-fold increase quarter-on-quarter. Currently, about 4,000 enterprises use Baidu's AI chatbot, including medical, education, tourism, legal, B2B, and automotive fields. Companies such as Samsung, Honor, and Auto Home have all reached cooperation with Baidu.

Recently, Baidu launched two MaaS products, Qianfan AppBuilder and Qianfan ModelBuilder. So far, Qianfan ModelBuilder has fine-tuned a total of 10,000 models.

Robin Li said that more and more enterprises choose to build models and develop applications on Baidu Cloud. In addition, Baidu's mobile ecosystem has also accumulated a large user base. Baidu will continue to update products and enhance its business monetization capabilities through continuous artificial intelligence technology innovation. "In the long term, we believe that the company's growth rate will be faster than China's GDP growth rate."It seems like you've pasted a series of non-text characters (nbsp) which represent non-breaking spaces. If you need help with a specific text or topic, please provide the actual content you'd like me to translate into English. I'm here to assist you with any questions or information you need.Please provide the text you would like translated into English.