2023 was an important year for artificial intelligence (AI), with McKinsey calling it a “breakout year" as some of the biggest tech companies in the U.S. rolled out new AI products and services. Yet, experts suggest we could still be in the early stages of the AI boom, anticipating an AI-fueled productivity surge could boost economic growth in 2024 and beyond.1
In 2023, some of the biggest tech heavyweights in the U.S. by market capitalization, including Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Amazon (AMZN), and Nvidia (NVDA), rolled out new AI products and services.
Boosted by investor enthusiasm about their AI efforts, shares of all five companies were up 50% or more for 2023 going into the final two weeks of the year, with Nvidia and Meta leading the pack, with year-to-date gains of 250% and 176%, respectively, through the close of trading on Dec. 18.
Microsoft-backed OpenAI also released updated versions of ChatGPT this year following its launch in November 2022, offering significant improvements to the popular generative AI (GenAI) tool. CEO Sam Altman reported in November that there were over 100 million active weekly ChatGPT users and that more than 90% of Fortune 500 companies are building on OpenAI's products.
As AI evolves, more workers and companies are integrating it into their workflows, surveys show. More than half (56%) of U.S. workers said they use GenAI at work, and 42% of chief financial officers (CFOs) reported that their companies are exploring ways to use the tech. Consultants have even warned that companies waiting to adopt AI risk being left behind by competitors.
AI quickly became one of the hottest investment themes of the year, with mentions of AI surging to record highs in earnings calls and views of the term on Investopedia's website soaring.2 Still, experts anticipate some of the biggest gains from AI could be yet to come.
Goldman Sachs economists recently raised their global ten-year Gross Domestic Product (GDP) forecast due to the economic gains anticipated from AI integration, saying that their "expectation is that generative AI will have a measurable macroeconomic impact."
The economists said they "expect the impacts on productivity to be meaningful,” estimating that AI could contribute to an increase of 1.5 percentage points in annual U.S. productivity growth if widespread adoption were achieved over the next decade.
Separately, McKinsey researchers reported that “generative AI’s impact on productivity could add trillions of dollars in value to the global economy,” estimating that genAI could add the equivalent of $2.6 trillion to $4.4 trillion annually.
“Generative AI could enable labor productivity growth of 0.1 to 0.6 percent annually through 2040, depending on the rate of technology adoption and redeployment of worker time into other activities. Combining generative AI with all other technologies, work automation could add 0.2 to 3.3 percentage points annually to productivity growth," McKinsey projected.3
GenAI “could ultimately automate roughly 25% of work tasks” in major developed markets like the U.S., Goldman economists estimated, anticipating that greater automation will "drive labor cost savings and free up workers’ time, some of which will likely be allocated to new tasks.”4As AI rapidly evolves, it may be difficult to anticipate the technology's future capabilities and impacts, but Haim Israel, head of global thematic research at Bank of America, expects 2024 will be "very important" for AI, specifically in regard to new generations of AI models and government regulation.
“For generative AI we really see all the stars aligning to create a massive revolution,” Israel told Investopedia, saying that “never [has a] technology [been] adopted so fast” and “it’s developing in warp-speed.”
A major "discussion in 2024 is also going to be about the next generation of AI-based technologies" which could include emotionally intelligent AI and simulation, which provides data for sectors where datasets are unavailable, Israel noted.
Another facet that Israel expects to be at the forefront of AI in the new year is regulation, as governments work to safeguard against potential harms brought on by widescale AI adoption.
Upcoming elections could highlight concerns around AI and privacy as well as misinformation, Israel noted, saying that "2024 is going to be a year that regulators across the world will have to start addressing" the impacts of AI.
Although there could be “(a market) cycle that will allow (active investors) to differentiate themselves positively (from) a passive fund,” Friedman said that active investors could also find “new ways to differentiate themselves through alternative data and...artificial intelligence”—two examples of active investment tools that are not open to passive investors.
For example, under Friedman’s leadership in 2021, Nasdaq announced a multi-year partnership with Amazon Web Services (AWS)—the cloud services provider that controlled 33% of the entire market in 2021—to build the next generation of cloud-enabled infrastructure for the world’s capital markets.13
Co-designed Nasdaq-AWS platforms will deploy two technologies that Friedman predicts will have a huge range of applications in the financial industry—and both are based on algorithms (i.e., a series of instructions that tell computers how to accomplish specific tasks). The first, artificial intelligence (AI), is a set of algorithms to enable computers to mimic human intelligence and cope with complexity; the second, machine learning (ML), is a set of algorithms to enable computers to learn from previous outcomes, make predictions, and complete tasks without being programmed.14
As Nasdaq migrates capital markets to the cloud, the AWS infrastructure will provide AI and ML to power high-frequency trading (HFT) systems that deliver an enormous competitive edge by leveraging complex algorithms to analyze multiple markets simultaneously and execute large numbers of orders within seconds. Not only will AI and ML allow Nasdaq to deliver real-time, mission-critical data to the investment community, but these algorithms will also enable the use of extremely large (and previously unusable) data sets to create structured data and build applications.
Friedman’s other suggestion for active investors seeking to differentiate themselves is alternative data, which (in finance) means data from a wide range of non-traditional sources that investment firms can analyze to find a market edge. The sources can be anything from metrics on web traffic, app usage, and social media to satellite imagery on mall traffic, GPS data from cellular networks, and corporate aviation intelligence.
For example, in 2018, shortly after Friedman’s promotion to CEO, Nasdaq acquired Quandl, an alternative data company that tracks private jets—including an Occidental Petroleum corporate jet that landed in Omaha, the headquarters of legendary investor Warren Buffett, in April 2019. In this scenario, active investors, anticipating that a major energy deal was about to happen, could act swiftly to take advantage before the Occidental share price soared skyward.15
Intel Corp. (INTC) is set to launch its latest processors designed for artificial intelligence (AI)-capable technology at a Thursday event that could boost the chipmaker's standing as a benefactor of the AI boom alongside competitors like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD).
The chipmaker is to unveil new power-efficient and AI-optimized processors including the fifth-generation Xeon processor, which the company says can handle demanding AI workloads for data centers, as well as well as the Intel Core Ultra Processor, which can "deliver power-efficient AI acceleration and local inference on the PC."1
The company could also disclose some of the customers that will use its new AI-capable processor at the "AI Everywhere" event. When Intel launched the previous generation of the Xeon processor at the start of 2023, it named key customers including Amazon.com Inc.'s (AMZN) AWS, Microsoft Corp.'s (MSFT) Azure, Alphabet Inc.'s (GOOGL) Google Cloud, and Dell Inc. (DELL).2
“AI represents a generational shift, giving rise to a new era of global expansion where computing is even more foundational to a better future for all," Intel CEO Pat Gelsinger said at Intel's Innovation conference in September.3Intel's launch comes just a week after AMD held a similar event where it unveiled its latest AI chip. The company's shares jumped afterward.
The AI-centered event could help reinforce Intel's position as a company poised to gain from the surge in demand for AI tools and applications like Nvidia and AMD have.
"AI is an emerging opportunity" for Intel, as the company "is making good progress in leading edge foundry business, which offers significant long-term upside potential," Raymond James analysts wrote in a note Tuesday.
Advanced Micro Devices Inc. (AMD) is set to unveil its latest chip designed to power artificial intelligence (AI) systems on Wednesday, a move that could help the chipmaker compete with Nvidia (NVDA) amid the AI boom.
The company is to launch the Instinct MI300 data center graphics processing unit (GPU) accelerator, at Wednesday's AMD "Advancing AI" event. Alongside the new AI chip, AMD says it will "highlight the company's growing momentum with AI hardware and software partners."1
AMD previously said it anticipates that MI300 will generate $2 billion in sales in 2024.
At the event, AMD could compare the capabilities of its new MI300 chip with Nvidia's H100, specifically highlighting memory content and bandwidth, Wedbush Securities analysts said in a Tuesday research note.
Nvidia, one of AMD's top competitors, has been touted as one of the "best positioned" companies to gain up to 80% market share from the AI craze, according to Jefferies LLC analysis.2
Nvidia announced its latest and most powerful GPU, the H200, designed for use in AI, last month, although reports published in late November said that the chipmaker would delay the release of its new AI chip to 2024 due to server maker integration issues. The Nvidia chip delay comes amid investor concerns that U.S. restrictions on chip exports to China are a significant risk to Nvidia.
Microsoft (MSFT) could be involved in the AMD event, Wedbush suggested in its report, as the tech giant already announced that it will add AMD's new chip to Azure, its cloud computing segment.3
Wedbush analysts have written that AMD could benefit from future growth driven by its present AI investments, while Nvidia "alone is likely to realize" a sales boost from an AI chip "over the intermediate term," compared with its competing chip makers.4Such a massive box office success could boost not just AMC, but other theater chains like Regal and Cinemark Theaters (CNK), which have struggled with declining attendance in recent years as would-be moviegoers opted to stream movies at home, particularly in the wake of the pandemic.
Shares of AMC surged shortly after "Barbenheimer" weekend before giving back most of those gains in the following days. They're up 26% so far this year, but down more than 70% over the past 12 months.
Birkenstock owner, private equity firm L. Catterton, is planning an IPO of the footwear maker in September potentially valued at more than $8 billion. However, precise details regarding the date and size of the IPO have yet to be released. It could be one of the most lucrative public offerings this year.
Although the paint used on-set was from Rosco, some of the biggest paint companies like Sherwin-Williams Co. (SHW) and Benjamin Moore also sell pink paint. They could have been directly impacted by a shortage or may see a spike in demand after the movie's release.
"Barbie," which topped $1 billion in global ticket sales on Sunday, isn't just one of 2023's biggest box office hits, it could also have a lasting financial impact on companies spanning fashion, entertainment, and home decor.
These include Mattel (MAT), the maker of Barbie dolls; theater company AMC Entertainment Holdings (AMC), whose theaters aired the film nationwide; and Birkenstock, the footwear maker whose sandals were featured in the film. The movie, whose set used vast quantities of pink paint, could even have impacted paint companies like Rosco and Sherwin-Williams (SHW).
Toy manufacturer Mattel, which has been making Barbie dolls since 1959, has partnered with 165 brands on promotions related to the "Barbie" movie. The movie has also boosted sales of Barbie dolls, lifting Mattel's earnings in the latest quarter.1
Mattel CEO Ynon Kreiz hailed the success of the film and the lasting promotional impact it will have on the company. "This moment will be remembered as a key milestone in our company’s history with the release of the Barbie movie, our first-ever major theatrical film," Kreiz said in the company's latest earnings report.2AMC Entertainment Holdings (AMC), the operator of AMC theaters, had the best week in its 103-year history in terms of admissions sales thanks to the side-by-side release of "Barbie" and "Oppenheimer," both of which premiered on July 21 and together have been dubbed "Barbenheimer." Sixty-five AMC locations set new one-week admissions records. The momentum continued well into "Barbenheimer's" second week, which was the third-busiest globally since theaters reopened from pandemic closures in 2020.3
Meta (META) and IBM (IBM) launched the AI Alliance Tuesday, an international community of more than 50 organizations involved in developing, researching, and creating the technology as the race for big tech companies to stake their claim in the artificial intelligence (AI) market heats up.1
The alliance includes tech companies, universities leading research, and scientific agencies, with members such as Advanced Micro Devices Inc. (AMD) Dell Technologies (DELL), Intel (INTC), NASA, and the Cleveland Clinic, among others.
The stated goal of the coalition is to "advance open, safe, responsible AI" by bringing "together a critical mass of compute, data, tools, and talent to accelerate open innovation" while "improv[ing] foundational capabilities, safety, security and trust in AI."2While Meta might not profit directly from promoting open source tools, the open source approach could help it gain influence and help it counter leading makers of closed AI models such as OpenAI, Google, and Anthropic.3
The announcement also comes amid concerns about safety and security risks associated with AI, with some governments exploring greater regulation of the technology.