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

As the artificial intelligence (AI) sector continues to experience fluctuations, CNBC commentator Jim Cramer has speculated whether Baidu Inc. (NASDAQ: BIDU) could be the next major Chinese technology company to capture investor attention.

What Induced This Speculation?: On Thursday, Cramer took to platform X to express his thoughts, stating, "First, it was DeepSeek, then it was BABA, and next, maybe Baidu?" This post sparked curiosity regarding Baidu and its position in the AI landscape.

His comments came after shares of Alibaba Group Holding Ltd. (NYSE: BABA) rose by 6.39% to $102.91, reflecting a growing investor sentiment favoring its Qwen 2.5-Max AI model. This new AI offering from Alibaba has reportedly surpassed the performance of DeepSeek-V3 across multiple challenging benchmarks.

The recent shift in market focus follows a period marked by significant upheaval, driven initially by the debut of DeepSeek. This introduction led to a massive selloff in tech stocks, with NVIDIA Corp. (NASDAQ: NVDA) witnessing a loss of nearly $600 billion in its market value just before a recovery of 8.82% the following day.

Implications of DeepSeek's Rise: DeepSeek, which came from an $8 billion quantitative hedge fund named High-Flyer, claimed to reach performance metrics comparable to those of OpenAI, yet at a fraction of the cost. The development of its R1 model required just $5.6 million and was built using basic Nvidia chips. However, concerns over the long-term sustainability of DeepSeek’s technology have started to dampen investor enthusiasm.

This shifting landscape has piqued the interest of notable financial figures. For example, Nassim Taleb, known for his theories on risk, cautioned attendees at the Miami Hedge Fund Week about the risks associated with the concentration of wealth within technology stocks. He mentioned that potential market downturns might be “two or three times bigger” than the prior selloff experienced.

In a parallel development, OpenAI is reportedly negotiating with SoftBank Group for a substantial $40 billion funding round, aiming for a $300 billion valuation. This raises the stakes within the competitive AI sector, especially as OpenAI has accused DeepSeek of unauthorized utilization of its proprietary models, complicating the narrative further.

Market Performance: On Thursday, Baidu reported a closing price of $94.77, reflecting a daily gain of 5.76%. However, in after-hours trading, the stock experienced a slight decline of 0.047% according to data.

This contemplation of Baidu's next steps in the escalating AI arms race illustrates the ongoing dynamic within the tech market, as investors keenly watch for emerging trends and potential shifts in focus.

AI, Market, Baidu