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Artificial Intelligence Poised to Disrupt These Industries, Moody’s Warns

Last Updated January 24, 2024 10:08 AM
Giuseppe Ciccomascolo
Last Updated January 24, 2024 10:08 AM

Key Takeaways

  • Artificial intelligence (AI) spending is expected to boom in 2027, reaching $521 billion. 
  • Generative AI, expected to account for 29% of AI spending by 2027, can fuel the growth.
  • However, AI will have a limited impact until 2026 but it will become more profound after that.

Banks, insurance, manufacturing, media, and software. These are some of the sectors that, according to Moody’s AI Outlook 2024 , will be influenced more than others this year by the spread of artificial intelligence (AI).

Moody’s wrote: “AI innovation will develop rapidly in 2024, attracting more users and fostering a vibrant network of hardware suppliers and app developers.

“Risks will also increase as organizations begin to deploy large-scale AI applications for the first time.”

AI Spending To Boom In 2027

Moody’s analysts project a surge in expenditures on AI systems from $76 billion in 2023 to $521 billion by 2027. Growing allocation towards generative AI systems should fuel this boom. Allocation is expected to rise from 11% at $19 billion in 2023 to 29% at $151 billion in 2027.

Despite an anticipated boost in supplies, Moody’s forecasts a persistent shortage of advanced graphic processing units (GPUs) in the ongoing year, maintaining a trend observed in 2023. Key players in the chip manufacturing industry, such as Nvidia and AMD, are poised to maintain their prominence, with Nvidia gearing up to launch an even more potent GPU in 2024.

Sources: International Data Corporation, Worldwide Core IT Spending for GenAI Forecast, 2023–2027, December 2023
GenAI spending will rise to 29% of all AI spending in 2027 from 11% in 2023.

Moody’s envisions a ripple effect on the semiconductor and consumer electronics sector due to the widespread adoption of AI. In their hypothesis, the proliferation of AI could potentially benefit the entire industry.

Moody’s said: “With the total sales of PCs and smartphones expected to reach $750 billion in 2024, even a modest uptick in the integration of AI-enabled devices could substantially expand the potential market for smartphone and PC manufacturers.”

Limited Impact Until 2026

According to Moody’s forecasts, the spread of artificial intelligence until 2026 should have a limited impact. Over the next two years or so, the change should only affect software and semiconductor manufacturers. From 2026, however, the consequences could be more profound. Sectors such as the media, automotive, manufacturing, and the banking-insurance sector could also get involved.

Moody’s said: The banking sector is one of the non-tech sectors that will benefit the most, even if the gains will not be immediate. Over the next two to five years, as AI use cases develop, efficiency gains are likely to be substantial for this highly digitized and data-driven industry.”

Sources: AI Tidbits, Moody’s Investors Service
The performance of open-source models improved sharply in 2023.

But artificial intelligence will have a “disruptive” effect only in a few fields. Among these, according to Moody’s, are legal services and customer service. AI, the strategists explain, could produce summaries of documents and other text efficiently, making part of the tasks performed superfluous.

In the world of media, however, Moody’s believes that music is at greatest risk. Some AI models can (re)produce music and videos, and big players such as Meta and Google have already released tools of this type.

Edge Computing Will Speed AI Applications Development

Edge computing, which involves processing data near its source instead of transmitting it to a distant cloud server, could catalyze the advance of AI applications. This not only helps the creation of applications capable of functioning offline but also ensures compliance with data protection regulations. It should also reduce computing costs. Semiconductor companies are actively enhancing their product offerings to empower consumer devices in running sophisticated AI models.

For instance, in October 2023, QUALCOMM Incorporated, a leader in mobile semiconductor application processors and modems, unveiled its Snapdragon platform, providing robust support for a myriad of AI applications. Similarly, Intel Corporation introduced the Core Ultra processors in December 2023, featuring an integrated AI accelerator device tailored for PCs.

This surge in AI application development holds the potential to rejuvenate stagnant markets. This is especially likely in the PC and smartphone sectors, which have experienced limited growth in recent years. With a projected total sales figure of $750 billion for PCs and smartphones in 2024, even a modest uptick in the adoption of AI-enabled devices could substantially broaden the market opportunities for smartphone and PC device vendors.

The introduction of new AI-powered smartphones and PCs will unfold gradually over the next 12 months. And the positive impact on the market will manifest in the coming year.

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