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AI Market Forecast: Top Trends That Will Affect AI in 2024

The future of artificial intelligence (AI) is looking brighter than ever.

Last year saw generative AI capture the public’s attention with the wide release of ChatGPT, and experts predict significant growth for the generative AI market in the coming years. According to 451 Research, market revenue is expected to grow at a compound annual growth rate of 57.9 percent to reach a valuation of US$36.36 billion by 2028.

What’s more, the World Economic Forum’s Future of Jobs Report 2023 names roles in AI and machine learning as some of the fastest-growing professions. This rapid growth and increasing demand for AI skills illustrates that AI is poised to play an increasingly important role in shaping the future of many industries.

AI to cut costs and boost efficiency in diverse sectors

Looking ahead, AI’s potential to drive innovation and efficiency in many industries is only set to grow.

One plus is the cost savings AI can create — according to a November report from Bank of America Global Research, AI will have a “mild-to-strong” positive financial impact on 75 percent of companies surveyed in the next five years.

In terms of project management, AI is assisting in tasks such as analyzing large data sets, offering more accurate predictions, automating services and tasks and providing sophisticated virtual customer support.

As businesses continue to adopt AI-powered solutions and technologies, analysts are expecting to see even greater advances in areas like healthcare. AI is assisting in breakthroughs in fields like neuroscience, genomics and biotech, and according to Statista, the market for AI in healthcare is set to reach around US$188 billion by 2030. Quantum computing in particular is playing a key role in advances as it allows for faster and more accurate analysis of large data sets, enabling researchers to map genes and brains and discover new drugs more efficiently.

In addition to its impact on healthcare, quantum computing is being used to tackle complex problems in climate modeling, making it easier for scientists to understand and predict the effects of climate change.

Tech heavyweights to pursue edge computing

According to research from Deloitte’s tech, media and telecom division, the importance of edge computing will grow in 2024 as AI technologies become more prevalent and advanced. The shift toward edge computing could also lead to a focus on the semiconductor and hardware industries, beyond only graphics processing unit (GPU) makers.

Edge computing, which involves the processing and analyzing of data closer to where it is generated, will play a crucial role in enabling faster decision making and improved AI performance. The Consumer Electronics Show, which will be held in Las Vegas in January, is expected to showcase a range of AI-powered products.

“As organizations deploy newly developed AI applications, they will see in many cases the need for inference to happen at or closer to the edge, avoiding network latency,” Phillip Merrick, co-founder and CEO of pgEdge, told Solutions Review.

As the need for more sophisticated AI capabilities grows, so will the importance of a robust and secure supply chain for the semiconductors and chips that power these technologies.

Ongoing trade tensions between the US and China are expected to have a continued impact in 2024, as is the Taiwan election, which is set to take place on January 13. Taiwan is a key player in the global semiconductor industry, supplying chips to many of the world’s leading tech companies, including NVIDIA (NASDAQ:NVDA).

NVIDIA is the clear leader in the chip market, with a strong presence in AI and other emerging technologies, and the company has also developed edge computing solutions based on its GPU technology.

However, the other ‘Magnificent Seven’ tech giants currently dominating the stock market are also investing in chip making, creating specialized chips for their cloud-based products. While these companies may not pose an immediate threat to NVIDIA’s dominance in the GPU market, they could potentially become more competitive in the future.

At the same time, established semiconductor companies such as AMD (NASDAQ:AMD), Intel (NASDAQ:INTC) and Qualcomm (NASDAQ:QCOM) are making strides in the AI and edge computing spaces. Their products, which include GPUs and edge devices that are applicable across a range of industries and use cases, could eventually challenge NVIDIA’s market dominance. And, according to iShares’ 2024 Thematic Outlook, there may still be attractive opportunities for investors to find undervalued AI stocks in the small- and mid-cap space.

Finally, the emergence of neuromorphic chips, which are designed to mimic the functioning of the human brain, could create new opportunities and challenges for semiconductor companies in the future. In October, IBM (NYSE:IBM) unveiled a prototype of NorthPole, its neuromorphic chip — developers have said the project “delivers massive improvements in energy, space and time efficiencies.”

Is the AI market overvalued?

While AI has been touted as a game changer in many industries, some analysts believe the hype surrounding AI may have reached its peak, and think the space may face growth challenges in the future.

A recent poll by 451 Research shows that public concerns regarding the impact of AI on the job market and society increased between Q4 2022 and Q2 2023, and CCS Insight predicts that AI may face a “cold shower” in 2024 as the industry grapples with the realities of bringing AI to the market responsibly and sustainably.

Josh Koenig, CSO at Pantheon, told Solutions Review, “(I) predict we’ll see some high-profile failures that puncture the narrative, and a lot of companies will cut or scale back investments as real-world applications are harder to find than initially thought. Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and OpenAI will keep trucking, as will the open-source alternatives, but it’ll be a while before we hit the ‘Slope of Enlightenment.’”

While the largest tech companies can afford to weather these challenges, smaller startups may struggle to stay afloat.

Investor takeaway

The future of AI looks promising, with significant growth expected in the generative AI market. The adoption of AI by enterprises is set to increase, leading to more advances in areas like healthcare and climate modeling.

While there may be some concerns surrounding AI, the opportunities it represents can’t be denied. As AI evolves and improves, its impact could lay the foundation for even more exciting innovations.

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

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