While AI will grow the fastest, Cloud (currently “just” 8% of global IT spend) could capture up to 41% by 2040. Is it even possible?

Let’s start 2025 with a big picture breakdown:

In recent research, McKinsey & Company, identified key sectors (arenas) expected to grow the fastest in the next 15 years.

Three Fastest Growing Tech Arenas of all?

1. AI Software/Services: $85B → $1.5-4.6T (17-25% CAGR) in 2040

2. Cloud Services: $220B → $1.6- 3.4T (12-17% CAGR)

3. Robotics: $21B → $910B (13-23% CAGR)

Projections on Cloud and AI seem overly ambitious - until we examine the underlying transformation/

Today 94% of enterprises use the cloud, but only 20% of workloads are currently in the cloud (McK). The survey of $1B+ revenue companies showed that most plan to 2X+ (double) their cloud usage by 2026.

Why? By 2030, cloud could generate $3T of EBITDA uplift for Forbes 2000 by helping them digitize operations, accelerate product development, etc.

Turns out, we're still in the early innings of the migration journey.

☑️ Growth Numbers Reality Check:

McKinsey pegs global external IT spending at ~$3T (2022) and expects it to grow to $8T in 2040, at 6.5% CAGR.

Cloud, which was 8% of global IT spending in 2022 will take 19-41% of its share by 2040.

So IT spend is expected to 2X+, while cloud to grow 7-10X and AI will 18- 50X. This is the power of compounding growth at 2-4X multiple of the market rate.

2024 acceleration showed us that cloud hyperscalers can indeed grow at 20%-30% range rates. Many experts predict cloud growth to somewhat moderate from 2026.

✳️ AI as Cloud Growth Multiplier

McKinsey highlights that “all cloud providers are likely to see themselves as AI providers, and cloud is necessary for the computation-at-scale requirements of AI, these two arenas are inextricably linked”.

AI is set to re-shape and accelerate the IT spend, growing itself from $85B to $1.5-4.6T.

Speaking of Gen AI - McKinsey predicted that 3/4 of its value would be in 4 areas:

• Customer operations

• Marketing and sales

• Software engineering

• R&D

But here's the elephant in the room:

The largest McK tech “arena” by 2040 isn't even cloud or AI - it's e-commerce at $14-20T!

Similar to cloud adoption, the retail e-commerce segment is currently “just” 20% of global retail revenues, and is expected to reach 27-38% by 2040.

♾️ Connect the dots:

These are B2C e-commerce numbers, but if B2B follows B2C's digital transformation path (as it historically has), B2B e-commerce (including cloud marketplaces) is similarly positioned to become a dominant B2B distribution channel.

Cloud providers therefore aren't just laying and selling cloud/AI infrastructure - they're building the whole ecosystems where software is built, bought and sold. The implications for the IT industry and its GTM is profound.

How are you changing your strategy in 2025?