Zhishang Securities released a research report saying that AIoT industry is one of the most promising sub-industry directions for 23H2 to 2024. The three logics for AIoT to embrace the “Cambrian explosion” are as follows: 1)AI big model to realize natural language interaction, and this fundamental change in the way of human and machine interaction makes the Internet of everything possible; 2) Under the capability of large model, ecological construction has become the core of scene landing, and AIoT, as the key entry and interface of product landing, is prominent in its importance; 3) Under the resonance of inventory cycle and product cycle, all kinds of new AIoT products are accelerating the landing, and the “Cambrian explosion” of AIoT innovation is just in time.

Zhejiang Merchants securities the main views are as follows:

The core of AIoT is human-computer interaction. ChatGPT realizes natural language interaction, making AIoT everything interconnection possible

AIoT is a combination of AI and IoT. The biggest impact of AI on IoT is that it fundamentally changes the way of human-computer interaction and makes natural language interaction possible.

Looking back at the development of AIoT industry’s phenomenal product smart speaker industry, although the past smart speaker can understand voice commands, but the interaction effect is not good, its essence is still a search engine, the ability to understand continuous dialogue, context and other problems, there are poor interactive experience, single application scenarios, lack of product innovation, poor connectivity and other problems. The AIoT sweeping robot in 2020 is essentially cleaning household appliances, and its interaction is mainly based on the graphical user interface on the APP, let alone natural language interaction.

With the development of generative AI like ChatGPT, the smart speaker industry is revolutionize, the core is “truly human-computer natural language interaction.” Relying on the advantages of the GPT model in content generation and understanding ability, the smart speaker can realize multiple rounds of dialogue, more prominent understanding of context, and truly realize natural and smooth human-computer interaction.

The bank believes that ChatGPT’s revolution to the AIoT industry is that it really changes the way of human-computer interaction, making the “connection” between the “Internet of everything” become smooth, and the Internet of everything in the AIoT industry really becomes possible.

AIoT is the key entrance of AI edge side landing, and also the key link of various ecological landing

On March 24, Beijing time, OpenAI released ChatGPTPlugins. In the running process of ChatGPTPlugin, it will call real-time information of the third-party network, give full play to the advantages of its large language model for information integration, and provide ordinary users with fast and effective high-quality information. Compared with iOS operating system, The “operating system” built by OpenAI based on the large language model will have fewer restrictions and wider application scenarios. Therefore, the construction of the ecosystem based on the large AI model will become the core of the competition among the giants.

Considering the high cost of computing power, most of the computing power of the end-side hardware is still placed in the cloud, but the end-side, as the entrance of interaction, will promote the iterative optimization of the personalized model. Therefore, AIoT intelligent hardware is of great significance for the construction of the ecology, including but not limited to the existing smart speakers, interactive headphones, etc., and various product forms based on large model enabler. For example, welcome navigation robot, companion nursing robot, medical self-service terminal, education tablet, etc. are of great significance for the ecological closed-loop of large models in various industries.

The product cycle resonates with the inventory cycle, and AIoT’s “Cambrian explosion” of innovation was just in time

The underlying logic of investment in AIoT industry at this stage is the resonance of product cycle and inventory cycle.

From the dimension of product cycle, ChatGPT and other generative AI innovated traditional AIoT products, making AIoT products with relatively short cycle production chain innovative.

From the perspective of inventory cycle, the intelligent hardware industry including semiconductor SoC chips is in the stage of passive destocking. The inventory level of the original factory continues to decline, and the number of days of inventory turnover gradually improves. A new round of product innovation cycle is expected to resonate with the inventory cycle in 23H2. Text, image, voice, video and other fields usher in the outbreak of product innovation, smart speakers, MR, wearable devices and other products are expected to drive AIoT’s new product development into the “Cambrian explosion” era.