Next in Tech: Why generative AI will explode in 2024

It's been just over a year since ChatGPT started to dominate headlines. The OpenAI platform introduced the world to generative AI, a type of AI that can be used in everyday functions. But what will 2024 bring? More AI.

Bob O’Donnell, TECHnalysis Research President & Chief Analyst joins Yahoo Finance Live to discuss what the next wave of AI means for users, companies, and investors.

Despite the craze over generative AI in the past year, O’Donnell says that not many people in the workforce have been directly using the applications, but that’s all going to change in the coming year.

While everyday people are going to be using AI, businesses are going to see a greater impact than the average consumer, O’Donnell maintains.

Nvidia (NVDA) has been the biggest name associated with AI, but "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,” O’Donnell says.

In terms of semiconductors, O'Donnell points to announcements from Intel (INTC) and Advanced Micro Devices (AMD) and how those companies will be looking to bring their chips to the masses. He also explains how tech companies like Amazon (AMZN) and Microsoft (MSFT) are going to join the ring with Nvidia and Qualcomm (QCOM), pioneering the next generation of AI-processing software.

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

Video transcript

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DAN HOWLEY: It's been a little more than a year since OpenAI's ChatGPT hit the web, setting off a generative AI revolution. But that's so last year. So what's next in tech for 2024? Well, more AI of course.

Whether we're talking autonomous vehicles, smartphones, health care, gaming, cyber security, AI is the future. With that said, here are three ways artificial intelligence will evolve in the new year.

First, you can expect audio and video based generative AI applications to start to take off, rather than just text and image platforms we have now. Companies like 11 Labs are already on the case, offering audio based generative AI capabilities, and more firms will likely jump in throughout the year.

Companies will also be releasing generative AI models tailored to specific use cases. Those can include models that improve weather predicting, platforms for security products, and more. In addition to slick new capabilities, you can expect generative AI platforms to improve their accuracy.

Companies are already working to cut down on so-called hallucinations, or when bots present false statements as facts, and they're only going to get better in 2024. If you thought 2023 was the year of AI, 2024 will blow you away. And here to talk about what's next in tech and the future of AI is Bob O'Donnell, TECHnalysis Research President.

Bob, thank you so much for joining us. I guess, for the first question, just generally, for 2024, where does AI go from here? It's already been a massive explosion in 2023.

BOB O'DONNELL: Well, you're right, Dan. But here's the thing to remember, even though it had exploded onto the scene in 2023, and we got a lot of press and a lot of coverage and a lot of companies talking about it, the average person in the workplace, only a few of them have actually used it. So 2024, exactly to your point, is going to be the year when it really explodes because every day, people are going to use it.

Middle managers in small companies all over the world, all kinds of different people are going to start really be using generative AI in a meaningful way, and that impact is going to be enormous. Because of it-- so you're absolutely right, that's going to be the big deal for 2024, when we're at a high level, is that the rest of the world will sort of catch up to the tech industry and the tech press and really start using this. And it's just going to blow people away.

DAN HOWLEY: Well, Bob, 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.

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 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 that we also need to think about for 2024.

DAN HOWLEY: I just want-- 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 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 ride 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 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 in 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 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.

DAN HOWLEY: Yeah, and Google's already doing that with their latest Pixel phones. They have their own AI chips built in, and they're doing AI generative-- AI natively on the phones with camera applications. So it's really interesting there.

I guess, the last question that we have here is, looking to the future, there's been kind of this shake up at OpenAI. Are there going to be repercussions for that throughout the industry? Is it a moment that kind of shatters the AI build up explosion, or is it kind of going to be business as usual?

BOB O'DONNELL: It's a fair question. I don't think it's going to be business as usual. And I think we are going to see some big changes happening. But in the same way that I think we're going to see some of the bigger semiconductors end up surviving more, I think the same thing is going to happen when it comes to the companies building these foundation models and doing a lot of the hard work behind the scenes.

It turns out-- initially, we were all told, oh, there's AI training-- there's model training and then there's what's called inference. And they seem to be somewhat equal. Well, in point of fact, it turns out building these models is unbelievably hard and unbelievably expensive. Which means only the biggest tech companies can afford to do this. And so I think you're going to see a big shift there.

The one difference is going to be the companies that the big guys have aligned with. So Microsoft, obviously with OpenAI, AWS just aligned with Anthropic. I think we can imagine other deals. Meta is going to be an important player as well.

Those big companies are going to continue to position themselves. And again, some of the smaller startups that are trying to build models, I think they're going to be challenged. There's going to be different ways of doing some of the work.

You talked about reducing hallucinations, there's interesting technologies being developed. Something called RAG, Retrieval Augmented Generation, that's a new way to think about how you build generative AI tools. All of those things are going to have a big impact on the market. It's going to be tough to predict exactly how it goes. But there's no question that we're going to see those of changes in 2024 for sure.