Bloomberg Surveillance · Thursday, September 10, 2026
Heath Terry, Global Head of Technology and Communications Research at Citi, describes the current AI investment landscape as a 'vertical wall of demand' meeting a 'horizontal line of supply' in data center infrastructure. This imbalance is driving up prices for inference, memory, and power, leading to higher revenues and margins for companies. Terry notes that recent frontier model releases have reestablished Western dominance in AI, crucial for the ongoing investment trade.
“Look, I think the moment that we're in right now is still best defined by what Sarah Fryer at OpenAI called the vertical wall of demand that they're running into. What I would add to that is the far more horizontal line of supply that we have in data center infrastructure and capacity. And what happens when you get into these sort of immovable object, irresistible force kind of moments is something has to break. And that break has been pricing.”
“And so, inference is getting more expensive, memory is more expensive, power is more expensive, everything in that supply chain is getting more expensive, which for the companies that you just referenced means higher revenues, higher margins, faster growth, and ultimately, we believe, higher stock prices that go along with that.”
“That's changed within the last week. You see the most recent frontier model releases. They have now reestablished that Western dominance, which is what you need for that trade to work. And I think it's a big part of why that trade's been working this week.”