Tech industry outlook brighter than 12 months ago, with GenAI emerging as top opportunity for 2024

• GenAI integration is the No. 1 opportunity for tech businesses in the year ahead
• AI deals and partnerships in 2024 could shape the future industry landscape
• Urgency to act now on AI; 90% of organizations at earliest stages of maturity

Following a challenging start to 2023 for the technology sector, characterized by macroeconomic weaknesses and cost-savings, company strategies centered on generative artificial intelligence (GenAI) have triggered a rebound in confidence. It is against this backdrop that injecting GenAI into digital transformation strategies has debuted in poll position on annual EY ranking, Top 10 opportunities for technology companies in 2024.

The report cautions, however, that most organizations (90%) are still at a nascent stage of AI maturity,¹ and urges companies to establish an “AI control tower” to support safe and ethical AI deployments, with humans at the center.

Ken Englund, EY Americas TMT Leader, says:

“In 2023 the tech industry navigated global economic headwinds and geopolitical tensions, while building widespread expectation around the potential of AI. The opportunity for the year ahead is clear. By putting AI at the center of their strategies, tech businesses could leapfrog competitors who were previously ahead, not only by accelarating their transformation journeys but also repositioning operations to capitalize on rapidly emerging technologies and business models.”

The opportunity to experiment with GenAI in front- and back-office use cases is another new entrant to the Top 10, ranked in second position. Rather than leveraging GenAI for all use cases, the report states that companies should target high-impact, high-value use cases and transformation opportunities. Examples include using GenAI in software coding (front-office); and deploying AI to attract and retain talent (back-office).

According to the report, industry leaders are acutely aware of AI’s potential to help run their businesses more efficiently, with 65% of tech CEOs stating that their organization must act now on GenAI to avoid giving competitors a strategic advantage.²    

Buy or build?

In this landscape, it is little surprise that shaping corporate investment strategy around the AI roadmap features in this year’s Top 10 (fifth position). AI and large language model (LLM) usage is taking off at pace, and acquisitions, deals and partnerships can speed up development by helping companies overcome challenges including demand for hardware, costly training and adopting the requisite talent to deploy.

Olivier Wolf, EY-Parthenon Global TMT Leader, says:

“Notwithstanding regulatory hurdles associated with AI deals, huge potential remains. The platform nature of today’s tech businesses means there will be many attractive companies with business models based on existing AI ecosystems. The optimal way to expand will be through a blend of small- to medium-sized acquisitions, corporate investments and partnerships, that will help companies access intellectual property and the skills needed to develop new propositions quickly.”

Diversifying supply chains

In fourth place on this year’s ranking is the opportunity to establish additional supply chains in emerging markets. The risk of supply chain decoupling continues to loom, particularly for hardward-oriented businesses, and a race is underway in subsectors such as semiconductors to realign supply chains in a way that mitigates geopolitical disruption. The report highlights an emerging trend toward creating operations in emerging markets, including India and ASEAN countries,³ helping expand operations away from regions exposed to trade conflicts.

AI demands energy action

Prioritizing energy efficiency of data centers also ranks in this year’s Top 10 – at eighth position. Data centers’ energy usage is imminently set to accelerate rapidly, triggered by the huge computing power required to train LLMs or run intelligent systems. Indeed, the report highlights that by 2027, AI could consume as much electricity as a country the size of the Netherlands.⁴ The report suggests that businesses respond by collaborating with energy equipment providers to develop innovative ways to power data centers – helping reduce costs in both the short- and long-term.

The full list of top 10 opportunities in technology for 2024 are:

1. Inject GenAI into digital transformation strategies and establish a “control tower”
2. Experiment with GenAI in targeted front-office and back-office use cases
3. Invest in new forms of digital infrastructure in the burgeoning “edge economy”
4. Establish additional supply lines in emerging markets
5. Shape corporate investment strategy around the AI roadmap
6. Harness platform business models to industrialize and scale advancing technologies
7. Establish proactive and holistic responses to new and forthcoming tax burdens
8. Prioritize energy efficiency of data center in environmental efforts
9. Invest in advanced risk tools and revisit trade-offs between costs, risks, resiliency and agility
10. Deploy advanced technology to reduce current and future cyber risks

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Notes to editors

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Report methodology

In order to gain deeper insights and create this year’s list of opportunities, EY teams supplemented initial research with additional insights and recommendations from EY client-serving teams across the globe based on their interactions with clients across the tech sector.

The top-10 ranking is designed to cover a wide array of areas of opportunity and a broad range of tech industry  subsectors. This means that not every opportunity is applicable to every tech company, with the degree of relevance potentially depending on whether a company is consumer-facing, B2B, or hardware versus software or services.