AI Insights from McKinsey’s Latest Report

A few weeks ago, The McKinsey Global Institute published their latest report, The Next Big Arenas of Competition.

 At 210 pages, it’s a loquacious tome that “identifies a set of present and future arenas of competition, industries that could transform the business landscape and our world.”

Defined by high growth and high dynamism, “these industries capture an outsize share of value growth, and market share within them shifts dramatically, as measured by the ‘shuffle rate,’ a metric of company market share movements. These two characteristics signal a new era of competition and signify new technologies and business models in play.”

The report highlights a number of emerging industries poised to reshape the global economy by 2040.

Among these arenas, perhaps none is as consequential, interesting, or transformative as artificial intelligence, which is why I wanted to highlight a number of key takeaways as they relate to AI.

While the report is worth browsing on your own, to make it a bit more palatable—and to show you one of the most useful tools to come out in the last year—I created a 12-minute AI-hosted podcast with NotebookLM that you can listen to here.

Major Revenue Growth

According to the report, AI is projected to generate between $15.5 trillion to $22.9 trillion (!) by 2040, making it one of the most significant drivers of future economic growth.

Its impact will not just be in automation or data analysis, but in transforming whole industries—from healthcare, with AI-driven diagnostics, to manufacturing, with autonomous systems that can predictively maintain and optimize operations.

The sheer scale of potential revenue underscores how important it is for companies to integrate AI into their core strategies—if for no other reason than to capture some portion of that economic value.

Furthermore, the report emphasizes that AI’s growth potential extends beyond direct applications. AI will drive significant economic activity by enabling innovations in adjacent fields such as robotics, quantum computing, and next-generation connectivity.

By acting as a multiplier for technological progress, AI is expected to open doors to entirely new industries that haven’t even been conceptualized yet.

However, it should also be said that predicting the future of an industry that has so recently grabbed the world’s attention is challenging.

Despite the uncertainty, opportunities along the gen AI value chain have already been identified, including building end-user applications, model hubs, and providing tooling for machine learning or large language model (LLM) operations.

Gen AI–enabled agents and systems tailored for specific applications are also emerging, opening up expansive potential in the field.

High Stakes and Dynamic Players

AI is fundamentally reshaping how businesses compete.

Unlike traditional sectors, AI is characterized by a high rate of market “shuffle,” meaning that market share changes hands rapidly.

This dynamism is driven by the speed of innovation and the accessibility of AI tools, which allows new entrants to leapfrog established players. McKinsey’s report emphasizes that the AI arena will see constant reshuffling as companies that leverage AI more effectively gain the upper hand.

What this means for businesses is simple: agility and adoption speed will be essential. Startups and established companies alike have opportunities to disrupt the market by innovating AI applications that address real customer problems.

Organizations that hesitate will risk losing out in this rapidly evolving space.

It’s also worth noting that the accessibility of AI has democratized innovation in ways that previous technological waves did not.

With AI frameworks, open-source models, and cloud computing resources readily available, even smaller players can make a significant impact. The competitive landscape is, therefore, not just for large enterprises; it is a fertile ground for agile startups with a clear focus on value creation.

Moreover, AI adoption has implications for worker productivity and economic growth. Analytical AI and gen AI together are expected to drive productivity improvements across various industries.

Enterprise use case of GenAI in particular, when accounting for productivity gains, has the potential to unlock $6.1 trillion to $7.9 trillion of value annually by 2040, driven by its applications in areas like customer operations, marketing and sales, software engineering, and R&D.

AI as a Catalyst

One of the most compelling aspects of McKinsey’s findings is that AI is not just an industry in itself—it is also the foundation that underpins many of the other emerging arenas of competition.

Whether it’s the future of air mobility, cybersecurity, or energy management, AI is the common denominator driving these sectors forward.

The report describes AI as both the catalyst and enabler for these new markets, underscoring its role as the underlying technology for tomorrow’s biggest opportunities.

For businesses, this presents a crucial insight: AI should not be viewed as a standalone investment but as a core enabler for expanding capabilities across industries.

Organizations that position AI at the heart of their strategy will be better prepared to seize new opportunities as they arise.

Moreover, the interconnectedness of AI with other emerging technologies means that those companies investing in AI are often better positioned to capitalize on broader technological ecosystems.

For example, advances in AI will support more efficient energy usage, fuel advancements in biotechnology, and enhance autonomous systems in mobility, providing businesses with multiple avenues for growth.

Position for the Future

The bottom line from McKinsey’s predictions is clear: AI isn’t just an emerging technology—it’s the foundation of the future economy.

Companies that begin investing in AI capabilities now are positioning themselves for long-term success.

AI has already started to rewrite the rules of competition, and those that get ahead of the curve are most likely to emerge as leaders in this new era.

Whether your organization is just beginning its AI journey or already making strides, now is the time to strengthen your strategy.

Develop internal capabilities, partner with innovators, and most importantly, foster an AI-First mindset within your teams.

The future is being built on AI, and those who recognize its transformative power will lead the way.

The next decade will be defined by those who adapt and innovate.

Organizations that embed AI not just as a tool but as a core part of their business DNA will create lasting competitive advantages.

The time to act is now, and the opportunity is immense—those who understand and leverage

AI will not just survive but thrive in the coming wave of economic transformation.