BEIJING — China’s Baidu plans to release the next generation of its artificial intelligence model in the second half of this year, according to a source familiar with the matter, as newer players such as DeepSeek disrupt the segment.

Ernie 5.0, called a “foundation model,” is set to have “big enhancements in multimodal capabilities,” the source said, without specifying its functions. “Multimodal” AI can process texts, videos, images and audio to combine them as well as convert them across categories — text to video and vice-versa, for instance.

Foundation models can understand language and perform a wide array of tasks including generating text and images, and communicating in natural language.

Baidu’s planned update comes as Chinese companies race to develop innovative AI models to compete with OpenAI and other U.S.-based companies. In late January, Hangzhou-based startup DeepSeek prompted a global tech stock sell-off with the release of its open-source AI model that impressed users with its reasoning capabilities and claims of undercutting OpenAI’s ChatGPT drastically on cost.

“We are living in an exciting time … The inference cost [of foundation models] basically can be reduced by more than 90% over 12 months,” Baidu CEO Robin Li said at the World Governments Summit in Dubai this week. That’s 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.

Baidu was the first major Chinese tech company to roll out a ChatGPT-like chatbot called Ernie in March 2023. But despite initial momentum, the product has since been eclipsed by other Chinese AI chatbots from startups as well as large-tech companies such as Alibaba and ByteDance.

While Alibaba shares have soared 33% for the year so far, Baidu shares are up 6%. Tencent has notched gains of about 4% for the year so far. ByteDance is not listed.

Baidu’s Ernie model already supports the integration of generative AI across a range of the company’s consumer and business-facing products, including cloud storage and content creation.

Last month, Baidu said its Wenku platform for creating presentations and other documents had reached 40 million paying users as of the end of 2024, up 60% from the end of 2023. Updated features, such as using AI to generate a presentation based on a company’s financial filing, started being rolled out to users in January.

The current version of the Ernie model is Generation 4, released in Oct. 2023. An upgraded “turbo” version Ernie 4.0 was released in August 2024. Baidu has not officially announced plans to release the next generation update.

The latest version of OpenAI’s ChatGPT, GPT-4o, was released in May 2024. OpenAI CEO Sam Altman said in a Reddit “ask me anything” session earlier this month that there wasn’t a public timeline for GPT-5’s release.

Baidu did not respond to a request for comment.

Super Micro Computer gave optimistic commentary for its fiscal 2026 and delayed annual report that overshadowed its slashed fiscal 2025 revenue guidance in Tuesday’s preliminary second-quarter results.

CEO Charles Liang said he is “confident” that the company will file its delayed annual report by the U.S. Securities and Exchange Commission’s Feb. 25 deadline. The company also said it expects to hit $40 billion in revenue in fiscal 2026. Analysts polled by LSEG expected $30 billion in revenue for the period.

Shares of Super Micro were up as much as 10% in extended trading. 

For the near term, however, the company slashed its guidance for fiscal 2025 revenue. The company said it expects revenues to range between $23.5 billion to $25 billion for fiscal 2025. That was down from a previous forecast of $26 billion and $30 billion. Analysts polled by LSEG expected revenues of $24.9 billion for the year.

The company also said it expects to report net sales between $5.6 billion and $5.7 billion for the quarter that ended Dec. 31. Wall Street expected $5.89 billion, according to analysts polled by LSEG. The company also offered weaker-than-expected guidance for the current period.

Super Micro also said that it “continues to work diligently” to meet the deadline to file its delayed fiscal 2024 annual and fiscal 2025 first and second quarter reports as it faces the possibility of a Nasdaq delisting.

Shares of the company, known for its servers powered with Nvidia graphics processing chips, have been on a rollercoaster ride since Hindenburg Research revealed a short position in the stock and the company delayed releasing its annual report in August. The company’s auditor quit in October, citing governance issues, and Super Micro’s drop in share price spurred the possibility of a delisting from the Nasdaq exchange.

The rollercoaster continued into Tuesday’s release. The stock is up about 27% in 2025 but down from its March 2024 high.

Super Micro’s prime position in the artificial intelligence world catapulted the stock to new heights as ChatGPT’s 2022 debut set off a craze for AI infrastructure. Recent earnings reports and commentary suggest that megacaps Meta, Amazon, Alphabet and Microsoft plan to invest as much as $320 billion into AI projects this year.

WATCH: Super Micro Computer cuts full year revenue guidance

Tesla shares dropped 6% on Tuesday after Chinese rival BYD announced plans to develop autonomous vehicle technology with DeepSeek, and said it would offer its Autopilot-like system in nearly all of its new cars, adding to fears that Elon Musk’s company is falling behind the competition.

There’s also growing concerns surrounding Musk’s distractions outside of Tesla, after news surfaced that the world’s richest person is offering to lead an investor group in purchasing OpenAI, while he steps up his work with President Donald Trump’s White House.

Tesla’s stock price has slid for five straight days, falling close to 17% over that stretch to $328.50, and wiping out over $200 billion in market cap.

BYD, which has emerged as Tesla’s fiercest rival on the world stage, said on Monday that at least 21 of its new model vehicles will come equipped with its partially automated driving systems that include features for automatic parking and navigating on highways.

Tesla doesn’t yet offer a robotaxi and its EVs currently require a human driver to remain at the wheel, ready to steer or brake at any time. On Tesla’s earnings call last month, Musk said the company is aiming to launch “Unsupervised Full Self-Driving,” and a driverless rideshare service in Austin, Texas, in June. Alphabet’s Waymo already operates a robotaxi service in Austin as well as in parts of Phoenix, San Francisco.

“In our view, competition between Waymo, Tesla and a host of Chinese players is a key driver on the path to commercialization” of robotaxis,” Morgan Stanley analysts wrote in a note to clients after the BYD announcement. The firm recommends buying the stock and has a price target of $430.

Waymo said on Tuesday that it added 10 square miles of coverage to its robotaxi service in Los Angeles.

In a report on Tuesday, Oppenheimer analysts wrote that the “autonomy competition may limit [Tesla] profitability.” Even if Tesla meets its June 2025 timeline for driverless cars in Texas, the company is “one of several autonomous technology providers, suggesting competition on price and performance,” they wrote.

In addition to running Tesla, Musk is CEO of SpaceX, owns social media company X and is head of artificial intelligence startup xAI. He’s also spending significant time these days in Washington, D.C., running the “Department of Government Efficiency” (DOGE) as a special government employee, aiming to slash federal spending, personnel, regulations and even entire agencies.

Altman told employees in a memo on Tuesday that OpenAI’s board hasn’t received an official offer from Musk and reminded staffers that “Elon has a history of making claims that don’t hold up.” 

Later on Tuesday, Toberoff said in a statement that he emailed the bid for OpenAI on behalf of the Musk-led consortium a day earlier to OpenAI’s outside counsel William Savitt and Sarah Eddy “for transmission to their client.” Toberoff said the bid was “in the form of a detailed four-page letter” and was addressed to OpenAI’s board.

“Whether Sam Altman chose to provide or withhold this from OpenAI’s other Board members is outside of our control,” he wrote.

Oppenheimer’s analysts also highlighted the added risks associated with Musk’s extensive work with the Trump administration.

While Musk’s behavior “has fans in certain circles,” his public life “risks alienating consumers and employees as the Trump administration tests the limits of its power,” they wrote. For example, they referenced recent vehicle registration data that showed steep year-over-year declines in California and across several European markets.

Tesla and Musk didn’t immediately respond to a request for comment.

WATCH: Tesla still on track