Baidu's (BIDU) - Get Report new chief operating officer may hold the key to unlocking the Chinese internet giant's potential in the artificial intelligence market.

Qi Lu will now oversee Baidu's products, technology, sales and marketing. He'll also head Baidu's artificial intelligence efforts, which the company has continued to invest in amid slowing revenue from its core search engine business.

Lu was previously at Microsoft (MSFT) - Get Report , where he served as global executive vice president and was in charge of its Office, Bing and Skype products. There, he also helped lead Microsoft's push into new areas like artificial intelligence and chatbots. Lu stepped down from his position at Microsoft last September to recover from a serious biking accident. Prior to Microsoft, Lu was an executive vice president at Yahoo! (YHOO) .

Analysts have said that search companies like Baidu could be shaped enormously by developments in artificial intelligence, particularly as technologies like speech recognition become more advanced.

"To achieve our goals, especially in artificial intelligence, which is a key strategic focus for the next decade, we will need to continue attracting the best global talent," Baidu CEO Robin Li said in a statement. "With Dr. Lu on board, we are confident that our strategy will be executed smoothly and Baidu will become a world-class technology company and global leader in AI."

Shares of Baidu closed higher by 0.2% to $176.95 on Tuesday.

The move comes as Baidu has pumped more cash and manpower into developing artificial intelligence technologies, specifically in autonomous driving, speech recognition and user profiling, among other areas. Baidu last October launched a $3 billion fund to invest in mid- and late-stage deals in the internet sector, preceded in September by a $200 million venture capital fund to invest in emerging artificial intelligence technologies. According to a recent story in The New York Times, the AI team at Baidu has 1,300 employees.

In August, Nvidia (NVDA) - Get Report announced it would partner with Baidu to develop an artificial intelligence-based computing platform for self-driving cars.

Baidu also has four research facilities dedicated to artificial intelligence and deep learning. Baidu Brain, the company's primary artificial intelligence platform, was created at its Silicon Valley-based research lab, which opened in 2013. On Monday, Baidu said it's also opening an augmented reality lab in Beijing where researchers will explore AR marketing technologies.

Internet search still remains the crux of Baidu's businesses (the company has been referred to as the "Google of China"), but the unit has been dented by new search engine rules put in place by Chinese regulators in August.

Baidu came under fire after advertising on the search engine prompted a student, who later died, to seek an alternative form of medical treatment. The backlash was largely considered to be a driver of the new regulations, which limits the number of promoted ads they can display on each search page, among other things.

Baidu said in its latest earnings call that the regulations would create the "most pronounced impact" on its fourth quarter earnings, though its third quarter results also took a hit. In its most recent quarter, the company said online marketing revenues declined 6.7% year-over-year, while the number of active online marketing customers fell about 16% year-over-year.

On the earnings call, Baidu's CEO Li said the company sees long-term value in artificial intelligence technology, particularly in its ability to uphold its search, autonomous driving and online and offline (O2O) commerce businesses.

"But the newer initiatives generally take longer to see material impact on revenue and earnings," Li added. "So, we'll need to wait for maybe a couple of more years."

Baidu's investments in artificial intelligence produce a somewhat murky picture in terms of profitability, said Morgan Stanley analyst Grace Chen.

"Artificial intelligence is the key to optimizing its search business, and it aims to leverage AI to launch new initiatives like autonomous driving," Chen said in a Monday research note. "This is promising over the long term but will take time."

Baidu Brain, which is open to third-party developers, could eventually lead to Baidu creating AI software that could be sold to companies, Chen explained.

Bernstein analyst Bhavtosh Vajpayee also contends that Baidu could monetize its artificial intelligence efforts, but that such services aren't likely to come for another several years. Assigning a value to an AI product would be "hazardous as of now," he added.

By 2020,Vajpayee noted the AI market could be worth anywhere from $37 billion to more than $1 trillion, but those are just early estimates.

"...For now, it best to note that Baidu seems to have the best combination of internal strengths and some external investments to chase this down, while Tencent and Alibaba (BABA) - Get Report seem to have made a few exploratory moves in the same direction," he added. "There could be some or immense value in these early moves, but for now, the excitement cannot be expressed in numbers."

Additionally, U.S. tech behemoths like Alphabet's (GOOGL) - Get Report Google unit, Amazon (AMZN) - Get Report , IBM (IBM) - Get Report and Apple (AAPL) - Get Report , among others, have all made significant strides in artificial intelligence technology.

Developments in artificial intelligence technologies have come at a time when the market has also been heating up with more consolidation and private equity financing. Equity financing in the AI market increased 746% between 2011 and 2015, according to market research firm CB Insights. And the venture capital arms of tech companies, including Intel's (INTC) - Get Report Intel Capital, Google Ventures and Samsung's (SSNLF) Samsung Ventures, are all leading investors in the space, the firm added.

Companies that develop AI technology related to personal assistants and customer relationship management will likely be the next areas for deal activity, CB Insights explained.

But when it comes down to who could surge ahead in the AI race, Roger Kay, president and founder of Endpoint Technologies Associates said it all depends on integrating the technologies into everyday life.

"Practical implementation is the challenge at the moment," Kay noted. "Although leading-edge firms like Alphabet's DeepMind are on the very frontier, Chinese firms are not far behind."

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