What's Next for AI in 2024?

AI has become the latest buzzword in the industry, keeping investors hopeful and driving market excitement in 2023.

According to FactSet data, 152 out of the S&P 500 companies mentioned "AI" during their third-quarter earnings call, making it the second-highest number in the past decade. This follows the previous quarter's record of 180 citations.

Nvidia, the AI-adjacent chipmaker, meanwhile, was the highest performing US stock this year, up 235% so far.

But will the buzz continue into 2024?

Before the interview with Marco Argenti, Goldman Sachs' chief information officer, The Bell discussed the future of AI. Argenti is known for his accurate predictions in the technology industry. Prior to working at Goldman Sachs, he was the vice president of technology at Amazon Web Services and was responsible for launching and managing various AWS businesses, such as mobile, serverless computing, Internet of Things, and augmented and virtual reality.

This interview has been edited for length and clarity.

What are some of the macro trends youre seeing for AI next year?

I predict the rise of "hybrid AI," where larger foundational models like ChatGPT and Gemini will work in tandem with smaller, fine-tuned AI models. At Goldman, we've found that by coordinating the strengths of both types of AI, we can achieve optimal results.

The larger foundational models excel in reasoning and data orchestration, while the smaller models are more adaptable to constrained infrastructure environments and can be fine-tuned for data privacy. The larger model processes user input, delegates tasks to specialized models, and utilizes summarization capabilities to generate answers. This collaboration between different AI models is what I refer to as "hybrid AI."

Which companies or industries can take advantage of the transition to more advanced AI models? In the financial services sector, there are specific and intricate applications, such as interpreting legal documents related to derivative contracts. A deep understanding of legal finance language is crucial in this context. By refining an AI model, these contracts can be interpreted and converted into a format that a generic AI model can utilize.

AI can be tailored to create specific models for calculating optimal portfolios or asset allocation, as well as for analyzing earnings calls and corporate filings to extract key points.

For example, a larger AI model can interpret complex client questions and break them down into instructions for specialized models to process. These specialized models then compile the information and provide a summary, resembling the collaboration between managers and specialists working closely together. This emerging pattern is expected to be increasingly adopted by companies.

Many major corporations and financial institutions have prohibited the use of AI. Could this specialized focus change that?

This leads to my second prediction: transitioning from the potential of AI to the safe execution of AI. From promises to tangible results.

I believe that in 2024, many proof of concepts will come to fruition, yielding a tangible return on investment for organizations. This will result in increased developer and operational productivity, as well as enhanced customer support. Operations will become more streamlined, with a strong emphasis on safety and governance. These aspects will be less of a concern during the testing phase of the technology.

There have been numerous discussions on how to regulate AI, but its full potential is not yet fully understood. There is uncertainty and fear surrounding the potential threat of AI to humanity. Looking ahead to 2024 and beyond, there will be a thoughtful balance in regulation that prioritizes security while also allowing room for innovation.

We must avoid creating regulations that put the United States or other countries at a disadvantage due to overly restrictive measures. How do you anticipate the 2024 elections will impact regulation and the spread of fear regarding AI?

This needs to be the main focus of the agenda. AI has already impacted people's lives, making it a major topic. There are concerns about protecting intellectual property, affecting millions of content creators who fear being replaced and not getting paid. Fear often stems from not understanding or trying something new, but with hundreds of millions of people using AI daily, including ChatGPT, these fears will diminish as people become more familiar with the technology in both consumer and enterprise environments.

We are still in the early stages of the process, and the potential for this technology to disrupt is not fully understood. Some may be skeptical about its impact.

AI was a major buzzword this year. Do you believe that investors will be more selective in 2024 when it comes to investing in the industry?

I predict that there will be a change in venture capital funding in relation to AI. Initially, AI was applied to many things. Now, we will see a shift in funding from creating new foundational models that require a lot of capital to investing in business-to-business and vertical applications associated with these models. This shift presents a significant market and opportunity in a new world. With AI, could we see a turnaround in the challenges faced by M&A and IPOs in recent years?

There are thousands of new companies being created, with a number of them expected to fail, while some will be acquired and others will go public. The top of the funnel right now is quite healthy, serving as a leading indicator.

Uber is joining the S&P 500. Heres what that means

Uber's stock soared to a new 52-week peak last week ahead of its anticipated debut on the S&P 500. CEO Dara Khosrowshahi expressed his pride in the Uber team for their achievement and looked forward to building on their success in the coming week.

The addition comes as no surprise, given that the company is valued at around $127 billion, making it the largest US company not currently in the index.

It has been a successful year for both Khosrowshahi and Uber, with the company achieving regulatory victories in the US and UK, reporting robust quarterly earnings and record ridership. Additionally, its stock has risen by over 150% in 2023.

The company was recently facing significant challenges, with criticism towards its leadership and resistance from cities and taxi unions. It was also experiencing financial losses, with its stock falling by approximately 52% in 2022.

Despite these difficulties, Uber's addition to the S&P 500 is a notable milestone for the ride-sharing company. To be included in the index, a company must meet certain requirements, and this achievement underscores Uber's growing influence and market stability, solidifying its position as a major player in the market.

The effects of Ubers addition to the stock market goes beyond Wall Street, as it also affects various retirement accounts such as 401(k)s, personal investment portfolios, and IRAs. These accounts are connected to funds that follow the S&P 500 index, and when a company like Uber is added to the index, these funds and portfolios will purchase its stock, potentially leading to an increase in the stock price.

Greyhound bus stops are valuable assets. Heres whos cashing in on them

Since the announcement on Dec. 4 that Uber would be added to the benchmark index by S&P Dow Jones Indices, the company's stock has already risen by approximately 10%. The current stock price is just below its all-time high, which was attained almost two years ago in February 2021.

Intercity bus lines such as Greyhound, Trailways, and Megabus, often overlooked but essential to America's transportation system, transport twice as many people as Amtrak annually. However, the entire network is facing a growing crisis as private bus terminals, including those of Greyhound, are rapidly closing across the country, as reported by my colleague Nathaniel Meyersohn.

In recent years, bus terminals in cities such as Houston, Philadelphia, Cincinnati, Tampa, Florida, Louisville, Kentucky, Charlottesville, Virginia, and Portland, Oregon, have closed. Major hubs like Chicago and Dallas are also set to close their bus terminals. Greyhound and other bus companies are moving their stops far from city centers, making them difficult to access by public transit, switching to curbside service, or even eliminating routes altogether.

Greyhound, the largest carrier, has been rapidly closing terminals and selling them to investors, including hedge fund Alden Global Capital. In the past year, Alden subsidiary Twenty Lake Holdings bought 33 Greyhound stations for $140 million. Alden is notorious for purchasing local newspapers such as The Chicago Tribune, New York Daily News, and The Baltimore Sun, reducing staff, and selling off some of their well-known downtown properties.

Alden has started to sell the Greyhound depots to real estate developers, speeding up the timetable for closures.