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Where to invest or start a business: 18 sectors expected to boom by 2040

Curious about the most promising industries for investment and startups?

A recent study, ‘The Next Big Arenas of Competition’ by McKinsey Global Institute (MGI), could be a great source of insights into where innovation, capital, and talent are likely to merge in the coming decades.

The research explores key technological growth areas expected to shape the global economy through 2040 and highlights 18 major sectors, or so-called ‘arenas’, that will significantly expand over the next 15 years.

What exactly are these ‘arenas’?

Arenas represent industries with the potential to transform the business landscape. They are a unique category of sectors defined by several key characteristics like high growth, dynamism, the ability to generate greater profits, and escalating investments. However, these same qualities lead to higher competition levels.

To define the high-growth sectors, MGI analysts examined data from the world’s 3,000 largest companies between 2005 and 2020. First, they identified 12 ‘arenas of today’, including software, semiconductors, payments, consumer internet, and other key industries. These arenas accounted for 9% of the total sample’s economic profit in 2005, but by 2019, their share increased to 49%.

The characteristics of ‘today’s arenas’ became a framework for 18 ‘arenas of tomorrow’ with the potential to shape the future.

Here they are:

  • E-commerce
  • AI software and services
  • Cloud services
  • Electric vehicles
  • Digital advertising
  • Semiconductors
  • Shared autonomous vehicles
  • Space
  • Cybersecurity
  • Batteries
  • Modular construction
  • Streaming video
  • Video games
  • Robotics
  • Industrial and consumer biotechnology
  • Future air mobility
  • Drugs for obesity and related conditions
  • Nuclear fission power plants

The emerging arenas are expected to generate between $29 and $48 trillion in revenue by 2040. In terms of profitability, they could contribute $2 to $6 trillion. Additionally, their collective share of global GDP is projected to grow from 4% today to 10–16% by 2040.

Let’s explore the top-5 leading arenas

E-commerce

E-commerce is already one of today’s arenas and it is expected to become one of tomorrow’s, too. The study highlights two main segments influencing this trend: retail e-commerce — which includes categories like general merchandise, apparel, and appliances — and food e-commerce.

In 2022, these two segments generated approximately $4 trillion in revenue. By 2040, analysts project growth to $14–20 trillion, with a compound annual growth rate of 7–9%. This is the highest absolute growth among all arenas. Researchers also see significant potential for this sector in developing economies, where e-commerce penetration is currently lower than in developed markets.

AI software & services

McKinsey suggests several growth scenarios for this arena, projecting a range of $1.5 trillion in the lower scenario up to $4.6 trillion in the higher one by 2040. With the highest CAGR among all arenas — from 17% to 25% — AI software and services are a major driver of transformation across other sectors and crucial for the growth of cloud services, another arena of tomorrow.

Cloud services

A survey estimates that approximately 94% of enterprises already use cloud services. McKinsey projects that cloud adoption will continue to rise as businesses increasingly migrate to the cloud. Cloud services are also a key infrastructure for AI development and have the potential to capture up to 41% of global IT spending.

Between 2005 and 2020, the industry’s revenues grew at a 17% CAGR. This growth could either continue at a similar pace or slightly moderate to a 12% CAGR. By 2040, revenues are expected to rise from $220 billion to $1.6–3.4 trillion.

Electric Vehicles

The discussion around EVs has been ongoing for years, but recent tech investments made them more practical and widely adopted. In 2023, EVs accounted for 18% of all new passenger car sales worldwide.

According to McKinsey, EV industry is one of today’s arenas and will be one of tomorrow’s. Main drivers for this growth are consumer and government commitments to sustainability, lower lifetime ownership costs of EVs, intense competition, and investments in charging infrastructure and electricity distribution.

As a result, revenues from EV light commercial vehicles, together with light-, medium-, and heavy-duty trucks, are projected to rise from $42 billion in 2022 to $540–900 billion by 2040 with a CAGR of 15–19%.

Digital advertising

Digital advertising is expected to grow at a faster pace than global GDP. MGI estimates that industry revenues will climb from $520 billion in 2022 to between $2.1 and $2.9 trillion by 2040, a CAGR of 8–10%.

This expansion is mainly driven by the major shift from traditional to digital advertising. In 2022, digital ads accounted for 65% of total ad spending — a number which is expected to rise to 80%-90% by 2040.

Several key factors continue to fuel this trend: the growing global middle class, increasing consumer engagement with digital platforms, strong ROI of digital ads, and new digital media channels.

Conclusion

Understanding potential growth arenas of the coming years is insightful for entrepreneurs and businesses that want to compete or investors looking to allocate their capital. However, their impact will be much broader: they will affect industries, job markets, and policy decisions for years ahead.

Over the next 15 years, success won’t come from simply replicating tech giants like Google or Microsoft. Instead, the real winners will be those who discover unexpected opportunities across arenas (like cloud + AI + robotics), develop deep expertise in their niche, launch rapidly and improve even faster.

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Source: https://www.mckinsey.com/mgi/our-research/the-next-big-arenas-of-competition