Baidu's stock surged 5.4% in Hong Kong after reports emerged that the Chinese tech giant is set to provide AI services for Apple's latest iPhone 16 and other Apple products sold in China. Namely, Baidu's AI services will be utilised by the iPhone 16, the Mac computer operating system, and the upcoming mobile operating system, iOS 18.

Apple reportedly considered collaborating with other Chinese companies, such as Alibaba but ultimately chose Baidu as its AI partner. While both Baidu and Apple have yet to officially confirm the collaboration, the potential endorsement from Apple could be a substantial branding opportunity for Baidu's AI product, Ernie Bot, according to analysts.

This strategic move by Apple complies with regulatory requirements in China, which mandate the use of Chinese-made AI models for products sold in the country.

Why does it matter?

Baidu's advancements in AI development have surpassed expectations, with faster monetisation prospects. The company's CEO, Robin Li, has projected significant revenue growth 2024 from its AI cloud business, potentially reaching 'several billion yuan.' Analysts view the potential partnership with Apple as a means for Baidu to monetise its AI initiatives further and gain an edge over its Chinese competitors. The experts noted that recognition from a global tech leader like Apple could solidify Baidu's position in China's highly competitive AI market.