In their AI Ascent 2025 event, Sequoia partners Pat Grady, Sonya Huang, and Konstantine Buhler outlined that AI represents a market opportunity at least 10 times larger than cloud computing.
“The breakout application category of the year was coding, which reached screaming product market fit,” Huang said in her address to the AI founders. “Anthropic’s Claude 3.5 Sonnet dropped last fall, triggering a vibe shift in the coding landscape. People are now using AI coding for really impressive things,” she said.
Whether you are a veteran or an experienced engineer or someone who has no idea how to code, AI is fundamentally changing the accessibility, the speed, and the economics of software creation, she added.
Agentic inflow
Huang predicted a strategic shift in the coming years, with many AI companies becoming agent-first and vertical agents emerging as the way ahead.
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To be clear, vertical AI agents are AI systems created to specialise in a specific industry, domain, or task rather than being general-purpose assistants. These are unlike general agents like ChatGPT that perform a broad range of tasks across multiple fields.
“Companies will create agents that are trained end-to-end to excel in a very specific workflow, trained through data to make AI systems performant at specific tasks,” Huang explained.
Big opportunity
Pat Grady, another partner at Sequoia Capital, lauded AI as a bigger market opportunity than prior technology waves — at least 10 times larger than cloud computing.
The cloud transition refers to the broad shift of businesses and individuals moving from traditional on-premises IT infrastructure to cloud-based services. It created a market far larger than the software market that existed when it began.
Similarly, Sequoia believes the starting point of the AI services market is already at least an order of magnitude bigger than the global software market at the start of the cloud transition.
“The AI market is coming after both software and services,” Grady said. “The precedent conditions are in place: compute, network, data, distribution, and talent. We have all the ingredients,” he said.
