Baidu has launched a slew of AI applications after its Ernie chatbot received public approval.
Chinese tech giant Baidu saw its shares in Hong Kong soar nearly 16% on Wednesday as it increasingly focuses on its artificial intelligence-related business that has also led to a ratings upgrade.
Shares in the Beijing-based firm, which holds a dominant position in China's search engine market, had gained nearly 8% overnight in U.S. trading.
The strong stock performance came after equity research firm Arete Research Services lifted its rating on Baidu's American depositary receipts to buy from sell, based on a positive outlook for its AI chip and cloud-computing revenue.
Baidu has been aggressively trying to grow AI-related chip and computing business, which supports its popular large language model and AI chatbot Ernie Bot.
To train its AI models, the company has started using internally designed chips, The Information reported last week, citing people with direct knowledge of the matter.
According to researchers from Arete, Baidu's growing chip venture has the potential to more than offset the impact from the company's struggling online advertising business.
Baidu, whose Hong Kong shares have gained nearly 59% this year, reported a drop in second-quarter revenue last month as its core advertising business struggled and returns from AI investments remained limited.
In addition to providing a new potential business venture, Baidu's chip drive could help it reduce reliance on AI chips from Nvidia , which has been subject to shifting export controls from Washington.