Chief Scientist’s Departure Is A Setback For Baidu

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Baidu (NASDAQ:BIDU) has been increasing its focus on its artificial intelligence (AI) initiatives of late. The company has been experimenting with this technology in several business lines such as “smart restaurants” and autonomous cars. However, Andrew Ng, Baidu’s Chief Scientist leading its AI group, recently announced that he will be leaving the company. This will be a setback for the company’s AI initiatives, which were being led by Mr. Ng for the past three years. The company is looking at AI as a key revenue driver in the long term, and losing an established leader in the business could impact the segment’s fortunes in the short term. According to our estimates, search services account for more than 70% of Baidu’s valuation, but the company is now focusing on other segments to diversify its revenue streams and drive growth.

AI is one of the pillars of Baidu’s future growth, and the company is taking several initiatives to drive revenues from this segment. Recently it introduced new AI and Big Data offerings for business customers who use Baidu Open Cloud in China. The company is positioning its expertise in AI as the key differentiator in its Big Data offerings.  Baidu is also working on AI-based home voice assistants – developing a product similar to Amazon’s Echo. To further this initiative, it recently acquired Raven Technologies, a startup developing a voice-assisted hardware device for homes. Andrew Ng was driving many of these initiatives.

Baidu is also working on AI projects which will support its existing search, advertising and maps business, giving it a competitive edge in these segments. Mr. Ng is a renowned data scientist, recognized as one of the key authorities on AI. Losing a key leader of its AI team, who is also a known expert in the field, will impact Baidu’s efforts in the segment. The company’s AI initiatives could slow down markedly in the short term, until it is able to find an appropriate replacement.

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