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AI PCs and smartphones to explode in popularity in 2024

The AI PC and AI smartphone markets are set to explode in 2024 and 2025. That’s according to analysis by research firm Gartner, which says smartphone makers will ship some 240 million generative AI smartphones in 2024, while AI PC vendors will ship 54.5 million units in the year.

“The rapid adoption of on-device GenAI capabilities and AI processors will eventually become a standard requirement for technology vendors,” Gartner senior director analyst Ranjit Atwal said in a statement.

“This ubiquity will pose challenges for vendors in differentiating themselves from competitors, making it harder to create unique selling points and drive increased revenues.”

AI PCs are laptops and desktops outfitted with neural processing units, or NPUs, that are specifically designed to handle AI tasks such as generative AI apps. Intel (INTC), AMD (AMD), and Qualcomm (QCOM) offer, or are preparing to offer, chips with built-in NPUs designed to slot into some of the latest PCs on the market.

In the case of Intel, that includes systems with its Core Ultra line of chips, which are currently only found in premium laptops in the $900 and up range.

Signs display the name of an Intel event called AI Everywhere in New York, Thursday, Dec. 14, 2023. Intel is introducing new products that are designed to be used with AI powered computers and applications. (AP Photo/Seth Wenig)
Signs display the name of an Intel event called AI Everywhere in New York, Thursday, Dec. 14, 2023. Intel is introducing new products that are designed to be used with AI-powered computers and applications. (Seth Wenig/AP Photo) (ASSOCIATED PRESS)

AI smartphones, meanwhile, are smartphones with processors, and neural engines, powerful enough to run on-device AI tasks. Google’s Pixel 8 and Pixel 8 Pro, as well as Samsung’s S24 line of smartphones, are some of the first to get the AI smartphone label.

While the number of AI devices is still relatively limited now, Gartner says they’ll eventually account for 22% of all PC shipments and 22% of basic and premium smartphone shipments by the end of the year. That’s up from 1% of smartphone shipments and 10% of PC shipments in 2023.

There’s just one problem: There’s still no truly impressive use case for either AI PCs or AI smartphones that makes them worth buying over their counterparts. The inherent improvement you get from a new generation of PC chips is why you’d likely buy an Intel, AMD, or Qualcomm-equipped laptop or desktop rather than because they have an NPU.

And you’d probably opt for a Samsung or Google smartphone because you prefer their overall features rather than because they’re marketed as AI smartphones.

Microsoft CEO Satya Nadella pauses during a video presentation at the company's annual conference for software developers, May 7, 2018, in Seattle. Nadella marks his tenth year as Microsoft CEO on Sunday, Feb. 4, 2024, capping a decade of stunning growth as he pivoted the slow-moving software giant into a laser focus on cloud computing and artificial intelligence. (AP Photo/Elaine Thompson, File)
Microsoft CEO Satya Nadella is also pushing for AI CPs. (Elaine Thompson/AP Photo, File) (ASSOCIATED PRESS)

The main selling point for these devices, so far, is that they can perform some generative AI tasks locally rather than having to rely on cloud services. That means your data is kept on your PC or smartphone instead of sent to the cloud. That provides some security and privacy advantages, because your information doesn’t have to travel across the web.

But being able to run an AI image generator app or ChatGPT-like program on your PC or smartphone isn’t exactly an exciting, marketable feature. That goes especially for PCs, because they’ll already come with Microsoft’s cloud-based Copilot AI software built directly into Windows. If you’ve got that, why do you need an AI PC?

PC chipmakers, in particular, are frank about the fact that they’re waiting on developers to come up with new killer apps that take advantage of on-board generative AI capabilities to entice consumers to buy AI PCs.

According to Atwal, AI PC and smartphone functionality won’t drive device sales until around 2027 as more AI-based capabilities hit the market. For smartphones, he said, that will mean a device that has a far deeper understanding of your needs.

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Subscribe to the Yahoo Finance Tech newsletter. (Yahoo Finance)

So why will AI PC and AI smartphone sales take off this year? Because consumers are going to start replacing the devices they purchased at the start of the pandemic, and many of those will be AI PCs and AI smartphones, because those capabilities are available on the best tech.

Eventually, though, AI PCs and AI smartphones will offer unique features that their non-AI siblings won’t be able to run.

“This evolution will transform smartphones into even more intuitive companions capable of comprehending and responding to human language and visual cues, which will elevate the overall user experience to new heights,” Atwal explained.

For now, the AI PC and AI smartphone revolution is still in its early stages. But as the technology matures, they’ll likely become the only PCs and smartphones we know.

Daniel Howley is the tech editor at Yahoo Finance. He's been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.

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