Artificial intelligence (AI) has arguably been the most influential factor in financial markets in 2024, facilitating astronomical growth for some companies whilst leaving others behind. The AI boom has generated clear winners and losers, reshaped industries, and sparked new investment trends as its applications expand beyond the hardware manufacturers and into other industries.
The Winners: Big Tech and Beyond
Unsurprisingly, semiconductor companies have been the biggest beneficiaries of the AI revolution so far. Firms such as Nvidia and AMD continue to dominate due to their cutting-edge general processing units (GPUs), which power the large language models (LLMs) and deep learning systems that drive AI innovation. As AI adoption grows, the demand for computational power remains insatiable, keeping these companies at the forefront.
The second half of 2024 in particular has seen the rise of AI-focused software firms. Companies like Palantir, AppLovin, Salesforce and Oracle have gained significantly. These companies leverage AI to enhance data analytics, automate customer relations, and optimise workflows. The growth in AI-as-a-service platforms has enabled businesses of all sizes to incorporate AI solutions, democratising its use and fuelling growth in the software industry.
The rally in software stocks in the second half of the year underscores the growing recognition that AI’s value extends beyond hardware manufacturers to include its practical uses. Software firms have thrived by creating value through efficiency gains, cost reductions, and improved decision-making capabilities for their customers.
The Losers: Legacy Tech and AI Latecomers
On the other side of the spectrum, companies which failed to integrate AI into their operations and product lines as quickly as their peers have faced challenges. Legacy tech firms that were slow to adopt AI, such as Intel and Dell, are struggling to compete with their more forward-thinking competitors. Additionally, industries overly reliant on outdated methods, such as traditional retail and non-digital advertising, are seeing their market shares erode as AI-powered alternatives take hold.
The heavy investment required for AI integration has also left smaller, undercapitalised firms lagging. In contrast to AI-focused companies, these laggards are losing relevance and appeal, further polarising the tech landscape.
Expanding Beyond Semiconductors and Software
AI’s reach will no longer be confined to just the semiconductor and enterprise software industries in 2025, as it begins to transform sectors such as industrials, healthcare, and even agriculture.
· Industrials: AI is revolutionising the industrials sector by enabling predictive maintenance, optimizing supply chains, and improving production efficiency through smart automation. Machine learning enhances equipment monitoring, reducing downtime and costs. Robotics powered by AI are streamlining manufacturing, while AI-driven logistics improve inventory management, driving efficiency and profitability across the sector.
· Healthcare: AI is disrupting healthcare by transforming diagnostics, drug discovery, and patient care. Machine learning models identify diseases faster and more accurately, while AI accelerates drug development by analysing vast datasets. Personalised medicine, powered by AI, tailors treatments to individuals, and virtual assistants improve patient engagement, streamlining healthcare delivery and outcomes.
· Agriculture: AI applications in precision farming are optimising water usage, pest control, and crop yields. Companies leveraging AI to combat climate variability are emerging as leaders in sustainable agriculture.
What’s Next?
The next frontier for AI lies in areas where efficiency gains and automation have untapped potential. Sectors like financial services are set to benefit from AI’s ability to enhance fraud detection, automate trading, and optimise risk management. Similarly, energy companies may use AI to improve grid management and forecast energy demand, vital for integrating renewable energy sources.
As AI continues to evolve, education and real estate may also undergo transformation. AI-driven virtual tutors could disrupt traditional education, while predictive analytics could redefine property valuation and urban planning.
AI’s journey in 2024 presents two contrasting paths: immense opportunities for those who adapt and stark consequences for those who do not. Its expansion into new industries is poised to deliver unprecedented efficiency gains and innovation, making it a cornerstone of future economic growth. Investors, businesses, and policymakers alike must prepare for a world where AI is not just a tool but a defining feature of industry leadership.