Chipmakers are flourishing as the world has started to invest heavily in AI. While new technology will continue to rapidly develop, will investors see this boom reflected in the markets as well? At the World Economic Forum in Davos, Switzerland, Cloudflare CEO Matthew Prince told Yahoo Finance that 2024 could be "the year of the AI letdown."

Synovus Trust Senior Portfolio Manager Dan Morgan joins Yahoo Finance to discuss what artificial intelligence trends mean for chipmakers and personal device sales.

"I look at AI as a productivity enhancement tool that will help... digital ad spend with Meta (META) and Google (GOOG, GOOGL) and Tiktok and, so forth, and Amazon (AMZN)," Morgan says. "We haven't really seen it really impact, let's say, Microsoft with ChatGPT (MSFT); We haven't really seen Alphabet with Bard and really have a dramatic, positive increase in terms of profits."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

JULIE HYMAN: Hey, Dan, it's Julie here. I want to talk a little bit about how much AI is playing into that equation and how much of it is other stuff, right? I was just in the World Economic Forum in Davos and spoke to Matthew Prince of CloudFlare, and he had an interesting comment about AI. I want to play for you what he had to say.

MATHEW PRINCE: I don't think AI is going to fade over the long term. But if I had to predict, I would say 2024 is going to be the year of the AI let down. It's going to make us recognize that it's really easy to create an AI demo, which is incredibly impressive. But it's very hard to take that demo and turn it into a product. That doesn't mean we won't turn it into a product, but I think it's going to be harder than we think. I don't think those products are going to come in 2024. They may not even come in 2025.

JULIE HYMAN: So, Dan, I'm just curious hearing that-- A, do you agree? And B, how is that going to play out when it comes to chips where there are a lot of high AI expectations baked in?

DAN MORGAN: Yeah, Julie, so I've always taken the point of view on AI that somewhat similar to your previous guest that you spoke to last week, and that is that I look at AI as a productivity enhancement tool that will help like digital ad spend with Meta and Google and TikTok and so forth and Amazon. We haven't really seen it really impact, let's say, Microsoft with ChatGPT. We haven't really seen Alphabet with Bard really have a dramatic positive increase in terms of profits. I think the one area, Julie, and you kicked it off with that was, how does it impact the chip manufacturers?