BlackRock Says AI Value Is Shifting Beyond Software, Flags ‘Physical AI’: Why MU, VRT And CEG Are in Focus

BlackRock is advising investors to target physical infrastructure rather than software as the artificial intelligence buildout speeds up. The firm notes that value is shifting toward computing power, data centers, and electricity. The thesis puts a spotlight on bottleneck equities in the semiconductor, data center infrastructure, and power sectors, such as Micron Technology Inc. (NASDAQ: MU ), Vertiv Holdings Co.

(NYSE: VRT ), and Constellation Energy Corp. (NASDAQ: CEG ). Commoditizing the Model Market BlackRock warns, in its weekly market commentary, that the software side of AI may face pricing pressures. ” Read Also: Scott Bessent Hires 'Wall Street Geek' David Zervos to Advise Treasury Amid Rising Yields: 'Whether It’s Trade, Whether It’s War, He’s Stepped Up' Targeting AI Bottleneck Opportunities Instead of broad market exposure, BlackRock recommends a selective approach.

S. ” Hardware suppliers in this space are already seeing margin expansion. ” While the firm acknowledges China’s “manufacturing and supply-chain advantage” in physical AI components, BlackRock remains neutral on Chinese equities due to intense domestic competition. ” Why MU, VRT, and CEG Represent ‘Physical AI’ Bottlenecks Micron Technology — The Memory Scarcity: As AI shifts from training to continuous inference, system memory has become a critical constraint, specifically High Bandwidth Memory (HBM) required for AI accelerators.

With HBM capacity largely sold out through 2026 and manufacturing expansion requiring multi-year lead times, memory suppliers like Micron are positioned at the center of a structural supply-demand imbalance. Vertiv Holding — The Thermal Limit: The extreme computational density of AI data centers generates localized heat that throttles processing speed, making thermal management as crucial as chip supply. Vertiv targets this precise bottleneck by providing the essential liquid cooling systems and power management infrastructure required to safely operate hyperscale AI facilities.

Constellation Energy — The Base-Load Power Deficit: AI data centers consume massive amounts of electricity and require 24/7 reliability that intermittent renewable sources struggle to provide. Because building new power grid transmission lines can take up to a decade, existing nuclear operators like Constellation possess significant pricing power, prompting hyperscalers to sign decades-long Power Purchase Agreements (PPAs) to secure reliable base-load energy. 34% Note: Performance data as of Sept.

28, 2026 Read Also: Fed’s New Financial Vulnerability Gauge Flashes Warning at 65th Percentile — Expert Says Risks Are ‘Notable’ But ‘Not Yet Elevated’ Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors. Photo courtesy: Shutterstock