The Race Takes Off in the Next Big Arenas of Competition

Why It Matters

The shift concentrates future growth and profitability in a handful of high‑tech arenas, forcing capital and strategy decisions to focus on AI, electrification, and omniscale firms to stay competitive.

Key Takeaways

• New “arena” industries generated half of global value creation since 2021.
• AI foundations, cloud, and semiconductors drive $18 trillion market‑cap surge.
• “Omniscalers” invest >$750 bn by 2025 across multiple arenas.
• Escalation races replace linear competition, amplifying R&D and capex intensity.
• Non‑arena firms show near‑zero growth, highlighting strategic shift opportunities.

Summary

The McKinsey Global Institute webcast introduced a forward‑looking framework that identifies 18 emerging "arena" industries—sectors such as AI foundations, electrification, hard‑tech, and digital platforms—that are poised to dominate future economic growth. By comparing data from the past two years, the institute found these arenas have generated roughly half of all global value creation since 2021, adding about $18 trillion in market capitalisation and driving a 29% compound growth rate, while the rest of the corporate universe posted near‑zero expansion.

Key findings highlight an unprecedented escalation race: firms are pouring capital and R&D into AI‑related semiconductors, cloud services, and software at a pace comparable to the Apollo program’s spending, with projected capex exceeding $750 billion by 2025. The report also spotlights the rise of "omniscalers"—companies like Alphabet, Amazon, Tesla, and Samsung—that operate across three or more arenas, leveraging massive cash flows to fund cross‑sector bets and shaping ecosystem interdependencies.

Illustrative examples include the partnership between Anthropic and XAI, Nvidia’s ascent to a $5 trillion valuation, and the rapid adoption of AI tools such as ChatGPT, all underscoring the speed of transformation. The omniscale firms now command significant revenue shares in AI foundations, digital advertising, and electrification, yet substantial market space remains for new entrants outside their dominance.

The implications are clear: investors, corporate strategists, and policymakers must reallocate resources toward these high‑growth arenas, prioritize AI and electrification capabilities, and monitor the competitive dynamics of omniscale players. Companies stuck in traditional sectors risk stagnation, while those that can navigate escalation races stand to capture outsized returns in the coming decade.

Original Description

Join our May 12 virtual event on the McKinsey Global Institute’s report, The race takes off in the next big arenas of competition. Report authors Kweilin Ellingrud and Kevin Russell will explore the findings, followed by a panel discussion moderated by Chris Bradley with Brendan Gaffey, Naveen Sastry, and Gayatri Shenai. The session will explore developments and themes in the arenas driving outsized growth, including AI services, semiconductors, cloud infrastructure, advanced manufacturing, robotics, next-generation energy systems, space, and biopharma; what sets nine “omniscaler” companies apart as they compete across arenas and invest at an unprecedented scale; how the AI foundation has driven growth since 2022; regional dynamics in the arenas; and risks, opportunities, and implications for countries and companies. https://bit.ly/3QcF23I

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