Dou Shen: Thank you, Miranda. This is a very interesting question. And I believe there are quite different views on this. I think both open source and closed source foundation models will coexist for a while. In fact, actually, we have already seen many models trained on top of the open-source foundation models and powering tons of applications even today on our cloud platform. But it’s really tough actually for our open source foundation models to keep evolving and getting better due to the lack of effective feedback loops, which play a super important role in improving the foundation models. And additionally, building and upgrading foundation models can be very expensive. So it is really important to build a durable business model to fund the sustainable improvement of the foundation models, so that they can finally provide long-term value to the market.
So for us it’s our priority that ERNIE keeps evolving quickly and remains the market leader, which can then attract more and more customers to use our platform to create innovative apps and improve their business. With their feedback from the real word scenario, we can further improve our foundation models. Looking ahead, I believe that there will be a limited supply of advanced foundation models, whether open source or closed source or even industry-specific available in the market. So like we just talked to me, as the industry progresses and enterprises will need advanced models to develop more sophisticated applications. But ERNIE, we will be one of the few foundation models that can satisfy those evolving demands in the long run.
Operator: The next question comes from Alex Yao with JPMorgan. Please go ahead.
Alex Yao: Thank you, management for taking the question and congrats on the strong quarter. I have a couple of questions on the margin outlook. Considering the opportunity of AIGC and the large language models. How should we think about the investment trajectory for the second-half this year? Additionally, more — once we start large-scale rollouts, what direct cost will be incurred, how should we compare the margin of ERNIE Bot or large language model related to products — related products than the existing business, I search, et cetera? More broadly, could management also provide directional color on the trend of Baidu Core margins when we look into the second-half of this year after the significant cost reduction, efficiency improvement incremented last year, what will be the key drivers of the profit moving forward? Thank you.
Rong Luo: Thank you, Alex. Let me take your questions. This is Julius. I think previously, Rob has already talked about a large of our opportunities of the ERNIE and ERNIE Bot. So in the first place, I would like to reiterate that we are highly committed to the long-term investments in these promise areas. And to support the fast upgrade of [earnings] (ph), and we have invested in compensation infrastructures. If you look into our cash flow statement, you probably can see that the Baidu cost CapEx in Q2 have increased over last year. The increase is mainly due to the hardware purchase to support the training and iterations of all AI campaigns such as ERNIE and ERNIE Bot. But the impact on the income statement side, which is quite manageable, that’s because of such hardware depreciations in general will spread over the next few years and the impact on the near-term profitability is not substantial.
The investment is expected to continue and the magnitude of the future investments will be highly correlated to the pace of the actual business expansions rather than only supporting the model training. Which means that in the near future, the spending will be sponsored by the incremental revenue, which is generated from our ERNIE Bots and formulates our positive virtual circles. And regarding to the margin for the financial model and related products, I believe it’s a little bit earlier to discuss at the current stage as the business model is still evolving. But as Rob has mentioned earlier, in part by the earnings, the search advertising could become more customized and which will result in increased ROI for advertisers. The additions for cloud services, as Dou has just talked about that, the [Indiscernible] and the financial models will import various industry and enhance the efficiencies across different industries.
So from a long-term perspective, we believe that the customers will be increasingly motivated to leverage our services to enhance their efficiencies and increasing our pricing power and resulting in higher margins as compared to the current cloud business. If we go into the second-half of this year for mobile ecosystem, we will continue to serve as cash cost for the group in the long run. Our goal for mobile systems is to consistently achieve high margins. For the AI cloud side, we aim to achieve the profitability on a non-GAAP OP level and improve margins over time, for the intelligent driving, while we firmly believe that there’s a huge long-term opportunities, we will continue to make sure we invest and measure pace. As a whole, our main focus is on developing a sustainable growth strategy for each businesses, which prioritize the long-term thinking.
In addition, we plan to invest in ERNIE and ERNIE Bot to take advantage of the huge opportunities presented by the foundation models at [Indiscernible]. Thank you, Alex.
Operator: The next question comes from Thomas Chong with Jefferies. Please go ahead.
