Rather than zero in on specific stocks to watch in 2024, we'll consider several verticals that developed last year and remain in focus heading into the new year. In fact, we saw several interesting themes develop and spread across the market in 2023, so it will be interesting to see what 2024 brings to these verticals.
Here are six technology verticals to watch heading into the new year.
Biotech impact
First, let's start with impact investing — and the industries that came to make good investments for impact investors in 2023. Of course, impact stocks are those from companies that offer some kind of positive environmental or social impact,
Biotechnology is not traditionally an impact sector, and the most obvious reason for its exclusion is the fact that not every single biotech company can qualify as an impact stock. However, biotech is an interesting industry to consider for an impact portfolio because it can serve as a diversifier in an area otherwise dominated by environmentally friendly companies.
It's easy to see why electric vehicles or green energy companies would qualify. However, clear impact narratives do exist for certain biotech companies as well. The sector just requires a closer look on a company-by-company basis to uncover the impact-oriented names.
For example, many biotech companies are developing treatments for conditions with significant unmet needs, often with the goal of greatly expanding the number of patients who can receive access to such treatments. Other biotech firms provide patient advocacy services and support, while still others strive to develop solutions for food security issues.
Semiconductors
Another technology vertical to watch is semiconductors. The Invesco PHLX Semiconductor ETF (SOXQ), which tracks the PHLX Semiconductor Sector Index, is up 67% for 2023 through midday on Dec. 29, the last trading day of the year.
However, the outperformance of most chipmaker stocks isn't the only reason this vertical is worth watching going into 2024. We're currently at a sort of tipping point for computer chips as newer and newer areas of technology are pushed forward.
Artificial intelligence was the big story for technology in 2023, especially generative AI, following the release of ChatGPT. However, in order to support the explosion in AI, chipmakers had to develop new chips and graphics processing units (GPUs) capable of handling the growing computing demands of such technology.
It may be a few months before we know the big tech story for 2024, but we can rest assured that the largest chip makers will be ready to start developing the semiconductors needed to power those new technologies.
Artificial intelligence
Speaking of AI-enabled semiconductors, the AI vertical itself is also worth watching in the new year. AI technology received a huge push forward in 2023 as more and more companies developed a variety of use cases for generative AI.
In 2024, we will likely see a greater variety of use cases for generative AI and possibly even the blooming of a new area of AI. In fact, DeepMind co-founder Mustafa Suleyman coined a new term in September called "interactive AI," which he said was essentially the next evolution of this technology after generative AI.
While generative AI generates content from information that's been fed into it, interactive AI will enable bots to actually complete tasks set for them by utilizing other software and people to do them. He also called for new regulations on AI technologies, a need that became clear in 2023 and will continue to grow as these technologies advance.
Mobile concierge technology
One other interesting trend we saw in 2023 was the emergence of mobile concierge technology. The areas of hospitality and property management particularly benefited from such technologies in 2023. A growing number of hotels, resorts and large city properties started to roll out mobile apps that enabled users to do everything from booking a variety of different services to ordering up room service.
As the transition from generative to interactive AI develops, mobile concierge technology should also receive a huge push forward. The number of available mobile concierge offerings will likely increase as well due to the rapid improvement in AI-related technology.
In fact, this is one tech vertical that could spin off in a wide variety of directions in 2024.
Medtech
Medical technology will remain another technology vertical of increasing interest in 2024, although it's one we've been watching for the last few years. The growing number of innovations in medical science has led to a wide variety of wearable medical devices capable of doing anything from taking your pulse or even blood pressure to checking for atrial fibrillation.
However, one area of medtech that doesn't get a lot of attention in the media is the so-called "Internet of Medical Things." We started hearing about the general Internet of Things several years ago as more and more devices and even household appliances began to come online.
Similarly, the Internet of Medical Things is a collection of medical devices that are coming online and making remote patient monitoring much easier than in the past. When medical devices can communicate with each other, it means a dramatic improvement in patient care — and the potential for more lives saved.
Adtech
Another interesting tech vertical we've seen develop rapidly over the last year or two is adtech. Although much of the hype around the temporary explosion in interest in the Metaverse has died down to a more normalized level, the ad-related use cases in the Metaverse continue to develop in exciting ways.
Aside from the Metaverse, the ad industry in general could change in a big way in 2024. Perhaps the largest change is expected to come from contextual targeting. Marketers previously depended on third-party data collected via cookies and related technology. However, new privacy regulations are forcing them to come up with new, more creative ways to connect with relevant consumers.
As a result, contextual targeting will likely explode in 2024. Instead of depending on user cohorts, contextual targeting taps into a webpage's content and keywords to choose when to show ads and which ones to display. This new form of ad technology is providing marketers with new and more interesting ways to successfully target web users — despite the rising privacy regulations.
In fact, Google has already started rolling out contextual targeting through Topics, an interest-based form of targeting that will replace Federated Learning of Cohorts.
Searching for new "-tech" verticals
Finally, one common overarching tech-related theme observed in the last few years is a growth in the number of industries that receive the ending "-tech." Aside from adtech, biotech and medtech, we've also got fintech, edtech, agritech, realtech, cleantech, and even regtech, or regulatory technology.
This list of -tech verticals is sure to continue growing, with even more additions likely to materialize in 2024. However, one of the many things that makes technology such an area of interest for so many people is the reality that new verticals are constantly appearing.
In fact, the true innovations of 2024 will be too challenging to predict in advance, so we can't wait to see what new technology verticals they come up with next.
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