Jim Cramer Ponders Baidu's Potential After Alibaba's AI Success

In light of the recent shifts in the artificial intelligence sector, CNBC's Jim Cramer raised a thought-provoking question regarding Baidu Inc. (BIDU), speculating if it could be the next Chinese tech giant to capture market attention.

Recent Developments: On Thursday, Cramer took to X to voice his curiosity, stating, "First, it was DeepSeek, then it was Alibaba Group Holding Ltd. (BABA), and next, maybe Baidu?" His comments came as Alibaba's stock experienced a significant boost, rising 6.39% to reach $102.91 due to increased investor optimism regarding its Qwen 2.5-Max AI model. Reports suggest that this latest AI model has outperformed DeepSeek-V3 across various benchmarks including Arena Hard, LiveBench, and GPQA-Diamond tests, indicating a strong competitive edge.

The surge in Alibaba's stocks follows a rocky period characterized by the upheaval caused by DeepSeek's sudden emergence. This shake-up initially triggered a mass selloff in the tech sector, leading to a dramatic loss of nearly $600 billion in NVIDIA Corp. (NVDA)'s market value on Monday, although the company managed a rebound on Tuesday with an 8.82% recovery.

Understanding the Impact: The entrance of DeepSeek, a product of the $8 billion quantitative hedge fund called High-Flyer, has raised eyebrows. DeepSeek claims to have matched the performance of OpenAI's models at much lower costs, having developed its R1 model with a budget of just $5.6 million and utilizing lower-end Nvidia chips. Despite this, there are growing concerns about the long-term sustainability of investments associated with DeepSeek.

This shifting landscape has caught the eye of notable market analysts. The author of “Black Swan,” Nassim Taleb, has voiced concerns over the instability surrounding wealth concentration in technology stocks. During discussions at the Miami Hedge Fund Week, he warned investors that potential market drawdowns may be “two or three times bigger” than the selloff experienced on Monday.

In other developments within the AI sector, it’s been reported that OpenAI is in negotiations with SoftBank Group (SFTBY) for a potential funding round valued at approximately $40 billion, setting a considerable market valuation of $300 billion. This indicates the fierce competition heating up in the AI field, especially as OpenAI has accused DeepSeek of using its proprietary models without authorization, adding more complexity to the current landscape.

Stock Performance: Meanwhile, Baidu's stock closed at $94.77 on Thursday, witnessing an increase of 5.76% during the trading day. However, in after-hours trading, the stock dipped slightly by 0.047%, as indicated by reports.

AI, Baidu, Alibaba