Chart of the Week

Coming into 2025, we witnessed more evidence of generative artificial intelligence (AI) moving to the edge. In other words, generative-AI models are more often being deployed directly onto local edge-computing devices, such as AI personal computers and AI smartphones. Edge computing devices are hardware components that process locally — close to the source of data generation — rather than by sending data to the cloud or data center.

Increasingly, large language models are designed to be smaller, more efficient, and more applicable for mobile smartphone devices. We see many other examples of AI edge devices that have the potential to support continued revenue growth, including smart home devices (for example, smart speakers and electric thermostats), advanced driver assistance systems for automotive, smart watches, and health fitness trackers.

The chart shows that since 2019, worldwide edge computing revenue is on track to nearly double by the end of 2025, and we expect growth to continue in coming years. We are favorable on the Information Technology sector, specifically the Semiconductors, Semiconductor Materials & Equipment, and Software sub-sectors. We are neutral on the Communications Services sector and favorable on two sub-sectors — Interactive Media & Services and Interactive Home Entertainment.

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