Baidu is preparing to release the next iteration of its artificial intelligence model, Ernie 5.0, in the second half of 2025.
This development comes as Chinese AI firms accelerate their efforts to compete with OpenAI and other Western tech giants while also contending with growing domestic competition from emerging players like DeepSeek. The upcoming Ernie 5.0 is expected to feature significant improvements in multimodal capabilities, allowing it to process and generate text, images, videos, and audio seamlessly.
A source familiar with the matter described the upcoming version as a foundation model with advanced multimodal capabilities. This means Ernie 5.0 will be able to handle various types of content across different formats, such as converting text to video or generating images based on verbal descriptions. Multimodal AI has become a crucial factor in the competition among AI developers, with OpenAI’s GPT-4o, released in May 2024, setting a new standard in the field.
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The announcement of Baidu’s latest AI milestone comes at a crucial time. Since launching its Ernie chatbot in March 2023, Baidu has faced increasing pressure from rivals within China’s AI space. The emergence of newer and more efficient models from Alibaba, ByteDance, and DeepSeek has challenged Baidu’s initial lead.
In January 2025, Hangzhou-based DeepSeek disrupted the market by introducing a highly capable open-source AI model that impressed users with its reasoning abilities and promised significantly lower costs than OpenAI’s ChatGPT. DeepSeek’s breakthrough caused a ripple effect in global tech stocks, underlining a shift in the AI industry.
Baidu’s struggles are also reflected in the stock market. While Alibaba’s shares have surged by 33% since the start of 2025, Baidu’s stock has only gained 6%, trailing behind Tencent, which has posted a 4% increase. ByteDance, despite being privately held, has continued to expand its AI-driven ecosystem, further intensifying the competition.
During the World Governments Summit in Dubai, Baidu CEO Robin Li acknowledged the fast-changing AI industry and highlighted the sharp decline in AI inference costs. He noted that the cost of running AI foundation models has been reduced by more than 90% within a year, leading to a proportional increase in productivity. Li emphasized that this rapid decline in costs is at the heart of innovation, making AI more accessible and scalable for businesses and consumers alike.
“We are living in an exciting time … The inference cost [of foundation models] basically can be reduced by more than 90% over 12 months,” he said, according to a press release of his fireside chat with Omar Sultan Al Olama, UAE’s minister of state for artificial intelligence, digital economy, and remote work applications.
“If you can reduce the cost by a certain percentage, then that means your productivity increases by that kind of percentage. I think that’s pretty much the nature of innovation,” Li noted.
However, as Baidu prepares for the launch of Ernie 5.0, it faces the challenge of proving that its model can match or exceed the performance of OpenAI’s latest advancements. OpenAI CEO Sam Altman has not publicly disclosed a timeline for GPT-5, but industry experts anticipate that its release could set new benchmarks in AI capabilities.
Despite the intense competition, Baidu has continued to expand its AI-powered services across various sectors. The Ernie AI model is already integrated into a wide range of consumer and enterprise applications, including cloud computing, search engines, and content generation tools. One of Baidu’s most successful AI-driven platforms is Wenku, which provides AI-assisted document and presentation creation. By the end of 2024, Wenku had reached 40 million paying users, reflecting a 60% increase compared to 2023.
To further enhance its AI business model, Baidu introduced new features to Wenku in January 2025, including AI-powered tools that automatically generate presentations based on corporate financial filings. This move aligns with Baidu’s broader strategy of monetizing AI capabilities beyond chatbot applications by integrating them into enterprise solutions and AI-as-a-service (AIaaS) offerings.
As the AI industry continues to evolve at a rapid pace, Baidu’s ability to maintain its relevance will depend on how well it executes the launch of Ernie 5.0. The model’s success will be measured not only by its technical advancements but also by its ability to attract businesses and developers seeking cost-effective, high-performance AI solutions.