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How AI and IoT will shape the investment landscape in 2024

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Nikita Krivelevich, Investment Director of Zubr Capital, a private equity firm that excels in boosting the growth of private tech, media, and telecom firms, explores the bright prospects in the rapidly growing AI and IoT markets.

The digital age is like a powerful train, moving us into a time where technology and daily life mix in exciting and sometimes worrying ways. In this time, where the Internet of Things (IoT) and Artificial Intelligence (AI) are not just popular terms, but important parts of our society’s development, there’s a key point for investors to learn. The year 2024 is set to introduce a unique investment environment, led by technology.

The unstoppable rise of IoT: fuelling a new investment landscape in 2024

The future is buzzing with activity as data moves and grows in importance, drawing in more money into investments that are more about real-world impact than just new gadgets. The Internet of Things (IoT), with smart devices everywhere connecting and automating our world, is right at the heart of this change. This isn’t just speculation; it’s a big wave that’s coming fast, set to change how we invest and do business in many fields.

Navigating the IoT market

As the International Data Corporation (IDC) forecasts, businesses in Europe are planning to spend an impressive $260 billion on Internet of Things (IoT) related products in 2024. The growth of IoT shows that it is no longer an option, but a strategic imperative for organizations as they face current challenges. This European investment is just part of a global trend, as IoT sales in businesses are predicted to reach $1.2 trillion by 2027.

Exhibit: Total European IoT Spending Forecast

Total European IoT Spending Forecast

It’s not just about the big numbers, though. IoT is starting to form the very fabric of our professional and personal lives. Smart devices are being used in everything from fixing machinery before it breaks down, to closely watching conditions in farming. The implications are twofold: on one hand, it’s elevating our quality of life through convenience and predictive insights; on the other, it’s becoming the backbone of efficiency that industries swear by.

The future is now: key IoT trends to watch in 2024

Be prepared, as the IoT market is brimming with numerous ground-breaking investment opportunities. As the integration of IoT deployments into modern IT infrastructures takes place, a wealth of investment opportunities are being introduced, especially in companies engaged in IoT infrastructure and services.

This insight stems from S&P Global Market Intelligence’s report that highlighted the emergence of 5G-IoT connectivity as a key trend, signalling enviable prospects for investors within companies that are propelling the growth of 5G technologies for IoT connectivity.

Additionally, the escalating importance of IoT security in operational technology opens doors for profitable investments in OT security vendors and providers of managed security services specializing in this area.

Furthermore, the consumerization of the enterprise metaverse through game-based and generative AI tools illuminates potential investment channels. Companies enhancing their enterprise metaverse capabilities with these technologies could be particularly appealing for investors.

AI: the frontier of investment in 2024

Artificial Intelligence (AI), the sensational technology of 2023, is poised to rule investment strategies once more this year. With GlobalData predicting the total AI market to skyrocket to $908.7bn by 2030, the focus on Generative AI (GenAI) is particularly intriguing.

As the fastest-growing among advanced AI technologies, GenAI’s market value is estimated to surge exponentially from $1.8bn in 2022 to a staggering $33bn by 2027. This significant leap represents an impressive compound annual growth rate (CAGR) of 80%. Amid this upsurge, around 44% of companies are preparing to make considerable AI investments. As the AI revolution continues to accelerate across various industries, investor sentiment may witness ebbs and flows. Yet, amidst it all, the year 2024 stands teeming with optimism, foreseeing AI’s potential to be a key driver of growth.


AI in the spotlight: developments to watch in 2024

As we have approached 2024, the evolving AI landscape promises ripe investment opportunities that savvy investors cannot afford to overlook. As confirmed by the experts at BNP Paribas Asset Management, the catalyst to this paradigm shift is the heightened focus on infrastructure development for AI model training. This emphasis, led by towering giants such as cloud service firms and large-scale businesses, is set to produce a windfall for semiconductor companies, server providers, and storage and networking gear providers.

Predictions suggest a potential industry shift towards versatile software underpinned by the power of an open-source ecosystem. This potential game-changer could challenge the supremacy of dominant GPU providers, creating a more level playing field in the market. Moreover, the continued use of ASICs for high volume applications is another factor that investors need to watch closely. Coupled with AI’s increasing influence over semiconductor demand, this could create lucrative opportunities for logic and memory chip firms, foundries, and semiconductor capital equipment and materials providers.

Peering into another corner of this expanding landscape, we also find opportunities in the back-end networking of AI supercomputers. Likewise, the development of more substantial, more potent AI systems by cloud service providers presents a wealth of potential for the discerning investor.

As the scope of AI expands into more use cases, from scientific applications to industrial process controls, investors should carefully research and identify the most promising stocks in this rapidly evolving sector.

The shift towards more considered and conservative funding in AI

Artificial Intelligence (AI) investment is witnessing an era of refinement and prudence, reflecting a positive shift in investor sentiment. According to an insightful observation made by Dr. Retterath, those investors who jumped into the AI market without deep expertise and entered too late into the game, are likely going to face a tough time learning.

While the field of AI technology has its inherent risks due to technological uncertainties, regulatory risks and market competition, investors are adopting a more considered and conservative approach to funding. This reflects a maturing market where investors are aware of the potential pitfalls and are more discerning in choosing worthy projects. The prediction for 2024 is for continued conservatism in investment, indicating a move towards sustainable growth and calculated risk-taking in the AI sector.

Investing in the future: a guide on how to invest in AI

Investing in AI offers immense opportunities and can be approached through various channels. These include buying stocks of tech giants such as Google, Amazon, Microsoft, and IBM, all heavily conducting AI research and development. Investing in sectors like healthcare, finance, and retail that use AI can also be beneficial.

Investing in AI-focused ETFs and mutual funds provides diversified exposure to this sector but carries tech sector risks and needs to be regularly updated due to rapid technological advancements.

Private equity and venture capital investments in AI startups offer prospects for significant returns, especially for those with high risk tolerance and substantial capital. Accredited investors can take a hands-on approach and invest directly in promising AI startups. Some venture capital funds even focus solely on AI and machine learning startups.

Self-Directed IRAs (SDIRAs) allow for investment in alternative assets like AI private equity, providing potential growth combined with favorable tax treatments. SDIRA investors can leverage their expertise to select investments aligning with their insights and risk tolerance.

Investing in AI infrastructure providers, like Nvidia, Google, and Taiwan Semiconductor Manufacturing Company, also presents excellent opportunities, since these companies are integral to the growth of AI.

Seizing the future: investing in the technological transformation of AI and IoT

In 2024, AI and IoT are not just investment options; they are investment imperatives. The prudent investor will recognize these trends not as market flutters but as future chapters of which they could be the authors. It’s not about competing with technology; it’s about converging with it. At its core, 2024 is like the dawn of a new tech age, and putting your money here is like getting a front row seat to the next big show, with tomorrow’s trends leading the way.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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