The tech sector outlook for 2024 is somewhat paradoxical. Tech sector trends in 2022 pointed to rapid artificial intelligence (AI) scaling and other innovations that pushed stocks like Nvidia (NASDAQ:NVDA) higher this year. But today, we’re not looking at new innovations within the tech sector. Instead, we’re forecasting wider adoption, productization, and commercialization of existing themes and trends as tech companies iron out the kinks and target greater profitability.
This means that, for many investors, 2024’s tech sector outlook is very similar to 2023’s — but on steroids. Companies with proven models will flourish as they expand marketability, while those hanging on by a thread post-Fed rate hikes might not make it to 2025. That’s good news, though. In most cases, capturing tech sector innovation upside is a matter of first seeing what’s worked thus far — then picking “best in class” stocks with proven markets and operational models to sustain themselves long term.
Applied Artificial Intelligence
AI and machine learning hit consumers hard this year as OpenAI and other offerings created a fun series of diversions with a handful of “real world” business applications. But applying AI to corporate entities within a B2B model is where 2024’s tech trends point. Companies are increasingly learning how to leverage AI to improve workflow and optimize processes beyond simply creating help desk-style chatbots or spinning reams of “SEO-optimized” drivel. Instead, companies are starting to use AI to streamline accounting systems, automate warehouse operations and more.
This means scalability and customizability will be AI’s two core tenets. A successful AI company will need to offer products to address the business concerns of increasingly large business entities — or those companies will develop the tech in-house. At the same time, ignoring small- and middle-market companies cuts off a whole series of revenue streams. Ultimately, artificial intelligence offerings will need to speak to a series of business sizes. At the same time, though, no two businesses are the same. Variations within industries mean that AI companies must offer clients the ability to customize and tailor the tech to meet their specific business demands.
Bottom line: Look for increased demand for practical, applied use cases within AI.
Augmented Reality
Once the stuff of science fiction, but then discarded as the tech didn’t match expectations, augmented reality (AR) is set to surge among innovative tech trends. 2023 already saw rumors spread like wildfire about emergent AR/VR headset tech. That consumer enthusiasm points to big things for a company that can “stick the landing” in commercializing a viable AR product for the masses.
AR tech, which superimposes generated images on a user’s view of the real world, enhances gaming experiences and revolutionizes industries like healthcare, education, and retail.
In healthcare, AR is used for complex surgical procedures, allowing surgeons to overlay digital images and information directly onto their field of vision during operations. This can lead to more precise and safer surgeries. Educational fields leverage AR to create immersive learning experiences, making abstract concepts tangible and interactive. This hands-on approach caters to various learning styles and can significantly improve student engagement and understanding.
In the retail sector, AR transforms the shopping experience at home and in physical locations. Virtual fitting rooms and interactive displays let customers try on clothes or visualize how furniture might look in their homes without physically interacting with the products. This enhances customer satisfaction while reducing return rates — improving retail’s struggling collective bottom line.
Edge Computing
Companies creating and maintaining data storage centers are exploding as our society generates, collects and maintains greater data pools. But, at the same time, there’s increased demand for smaller-scale, faster, localized systems to process information. That’s where edge computing shines. In many ways, edge computing is equivalent to artisanal data management and stands out as a “return to basics” tech trend in 2024.
Edge computing involves processing data closer to its source, like smart sensors, rather than pushing info to a central data-processing warehouse and waiting for its return. This proximity reduces latency, leading to faster response times and enhanced data management efficiency. It’s especially hot for real-world applications needing instant data analysis, such as self-driving cars, that need to process vast amounts of data on-the-fly to make immediate driving decisions.
Industrially, edge computing lets management run predictive maintenance on machinery, with sensors detecting potential issues before they become major problems. This cuts down on downtime and maintenance costs, improving margins and efficiency.
Since cybersecurity is increasingly top-of-mind, edge computing helps companies address privacy and security concerns by processing sensitive data locally, reducing the risks associated with data transmission and storage in the cloud. This is especially important in sectors like healthcare, where patient data privacy is paramount, and regions where strict privacy regulations hinder operations.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
