State of the OpenCloud 2024 (Battery Ventures)
Summary
- Artificial intelligence creates a $4T+ market opportunity as it disrupts software, services, and labor markets.p.2
- Cloud providers face ~$2T+ of incremental cumulative revenue up for grabs by 2030 from expanding AI adoption.p.8
- The backlog of software unicorns in the US has grown by 3x since 2020 while large IPOs and M&A transactions declined.p.16
- ServiceNow achieved a 34% CAGR over 10 years to reach $10B in annual revenue through continuous product innovation.p.22
- Total enterprise value for top cloud and AI companies expanded to $17T, up from $8T pre-ChatGPT.p.37
Key insights
- Infrastructure companies have emerged as early beneficiaries by building the foundation to support new AI workloads.p.2
- Public cloud provider growth reaccelerated as AI enabled new enterprise workloads following optimization headwinds.p.6
- Enterprise deployment of generative AI remains in early stages, with actual production implementation lagging behind expectations.p.9
- Software multiples have stabilized, with top-quartile public software companies maintaining a 12.7x EV / NTM revenue average.p.11
- Public markets continue to value high revenue growth over profitability among software companies meeting the Rule of 40.p.14
- High valuation capital raises early in the cycle have led to creative exit strategies like acquihires and technology licensing.p.17
- Major tech companies including Amazon and Meta are mandating in-office work days to foster collaboration and culture.p.29
Topics and entities
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