US shares of the Chinese tech giant Baidu gained after the company revealed its Ernie X1 model, said to be as capable and more cost efficient than DeepSeek.

Baidu introduced Ernie X1, a reasoning model that can support tools such as advanced search, generation of AI images, and webpage reading.

Baidu introduces its low-cost AI models, including Ernie 4.5, to rival DeepSeek and strengthen its position in China’s growing AI market.

DeepSeek has emerged as the new standard for AI model makers to beat after launching R1 just before Christmas. As a reasoning model, R1 stood out for matching the capabilities of the best U.S.-made AI models, despite its maker only spending a small fraction of the cost its rivals had spent in training it.

DeepSeek, a rising Chinese AI startup, has disrupted the industry by introducing AI models it claims rival, or even surpass, leading US-based alternatives — while maintaining significantly lower costs. This has injected fresh momentum into the global AI race, prompting established players like Baidu to step up their game.

Chinese internet search giant Baidu released a new artificial intelligence reasoning model Sunday and made its AI chatbot services free to consumers as ferocious competition grips the sector.

Baidu Inc. released a new artificial intelligence model that articulates its reasoning, in an apparent bid to regain momentum against up-and-coming rivals like DeepSeek.