AI in 2024: The 'big getting bigger'

With the Consumer Electronics Show (CES) kicking off next month, tech companies from around the world are excited to showcase their latest products. Despite the many tech advancements that will be highlighted, generative AI is likely to be the one that takes center stage.

Bob O’Donnell, TECHnalysis Research President and Chief Analyst, joins Yahoo Finance Live and shares what he expects to see at CES.

Although there are going to be startups leaving their mark in audio and video applications, O’Donnell makes the case that the big tech companies are going to see the greatest earnings in 2024.

The smaller companies are going to be financially challenged with building the foundation models that are essential for creating new and accurate AI systems, O’Donnell says, while companies like Microsoft (MSFT) and Amazon (AMZN) will be a case of the "big getting bigger."

For more from this episode of NEXT:

To see the full NEXT episode: Next in Tech: Why generative AI will explode in 2024, click here.

To read more about AI from Yahoo Finance's Tech Editor Dan Howley, click here.

Video transcript

DAN HOWLEY: In about a month's time, a little more than a month, the Consumer Electronics Show, CES, kicks off in Las Vegas. We're already hearing rumblings of what we might see. I guess, how will AI dominate the stage there in Vegas?

BOB O'DONNELL: Well, everybody's going to talk about it, right? I mean, you know, it's almost become a joke now at tech conferences if you don't mention generative AI like 10 times in the first two minutes. And so we're going to see everybody talk about it.

How it plays out at CES is going to be interesting. Because in it, I believe we're going to see more of an impact initially in business than we are consumer. Certainly, there's going to be consumer I'm going to talk about a couple of things related to that in a second.

So we'll see a lot of noise. And we'll see people talking about devices that can do generative AI. And that's going to be important. And there are going to be devices like PCs that I think are going to be a big factor in 2024. And of course, consumers and businesses will use them.

We'll see other gadgets. We'll see other types of services. There's going to be-- there's a lot of startups who are trying to make a splash in generative AI. You talked about audio and video applications. Certainly, we're going to see that at CES.

So I think that's going to be important. But I think there are some other interesting long picture trends we also need to think about for 2024

DAN HOWLEY: I just want-- you know, to your point about companies having to say something about generative AI, you just look to Apple where they didn't mention anything about generative AI. They kept kind of mum on that. Did a lot of machine learning talk but nothing--

BOB O'DONNELL: Yup.

DAN HOWLEY: --generative AI related. And a lot of folks were thinking, when's Apple going to jump into this? But, you know, NVIDIA was the big company in 2023 to dominate with their AI semiconductor technology, the graphics chips that power a lot of this was a gaming company. Now, they're still in gaming. But headlong into AI, where does that company go from here?

BOB O'DONNELL: Well, I mean, NVIDIA is going to continue to drive this generative AI wave. Because over the years, what they ended up doing was building up this platform of software called CUDA. And CUDA is what all the developers for these generative AI tools are using. And they're very comfortable with it. And there's this broad base of tools.

And that's the advantage that NVIDIA has had that's made it so difficult for other companies to compete with them. Now, we are going to see big competition. And this gets to hints at to what I was hinting at earlier. In 2024, we're going to see a ton of other semiconductor companies, obviously, be going after NVIDIA. And the truth is the market is looking for more competition. It always does, right?

So AMD this week has an event. Intel next week has an event. We're going to see-- and we just saw AWS announce some chips. We just saw Microsoft announce some chips. So what's really interesting is all the big traditional semiconductor players are going to be out there talking about this as well as, you know, companies, you don't normally think of as chip companies being Amazon and Microsoft and Google.

There's going to be a little bunch of little startups too. I think they're going to be challenged, to be honest with you. I think this is going to be a case of the big getting bigger. Another big name is going to be Qualcomm. And this gets to the other theme I was talking about.

2024 is going to see the launch of AI-equipped PCs, PCs that actually can do some of the work that we've traditionally had to do in the cloud on the device. And that's going to make things very interesting. And we're going to see a lot of competition amongst AMD, Intel, and Qualcomm. We're going to see all the big PC players-- HP, Dell, Lenovo, Apple as well-- try and get in there and talk about this next generation of PCs.

And the timing is perfect because remember that a lot of companies had to buy PCs during the very beginning of the pandemic. 2024, it's that four-year refresh time. So you put that together. I think that's going to be an interesting category to watch moving forward as well.