Observed Signal · Jun 30, 2026 · Analyst Commentary · Source: CNBC Investing · Impact: 3/5 · Sentiment: Positive
Analyst: Invest in the AI Data Layer for H2 2026
Citigroup analyst Heath Terry recommends investors focus on the "data layer" — the software layer above storage and below applications that cleans and organizes data for AI — in the second half of 2026. Terry argues consumption-driven business models at the data layer (examples: Snowflake, MongoDB, Datadog, Elastic) will be primary beneficiaries of accelerating AI demand. The piece notes frontier models such as Anthropic and OpenAI are preparing for public offerings while competing with lower-cost open-source models. It highlights technical trends supporting the ecosystem, including an "agentic" phase of AI, orchestration at the hardware level, and application-level model routing; private model-router companies named include Not Diamond, Martian and OpenRouter. The article cites recent revenue-growth data for Snowflake and Datadog and FactSet valuation multiples.
Analyst guidance from a Citigroup AI research head highlights where investor demand may concentrate (data-layer infrastructure and consumption-driven software), signaling potential capital flow and vendor opportunity in cloud data, observability, databases and model orchestration — relevant to enterprise software and AI infrastructure vendors.
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Key Takeaways & Evidence Grounding
- Heath Terry, head of AI investment research at Citigroup, recommends investing in the data layer for the second half of 2026.
- Snowflake reported 33% annual revenue growth and was described as trading at 112 times forward earnings with an enterprise-value-to-sales ratio above 14, per FactSet.
- Datadog reported 25% annual revenue growth and was described with a forward price-to-earnings multiple of 98 and an EV-to-sales multiple of about 19.
- Frontier AI model companies Anthropic and OpenAI are competing ahead of expected public offerings while open-source models offer lower-cost alternatives.
- Model routing firms (private companies) named in the article include Not Diamond, Martian and OpenRouter, focused on coordinating models to reduce costs for enterprise AI customers.
Connected Companies & Entities
9 Entities mapped“Snowflake soared at the end of May after reporting 33% annual revenue growth....”
““The companies that are winners are the ones that are exposed to consumption... The Snowflake s, the MongoDB s, the Datadog s, even companie...”
“Datadog made a similar move at the beginning of May after reporting 25% annual revenue growth....”
““The companies that are winners are the ones that are exposed to consumption... even companies like Elastic that have exposure to consumptio...”
“At the level of AI applications themselves, frontier models like Anthropic and OpenAI are jockeying for position ahead of expected public of...”
“At the level of AI applications themselves, frontier models like Anthropic and OpenAI are jockeying for position ahead of expected public of...”
“Shares trade at 112 times earnings for the next 12 months, and the company has an enterprise value of more than 14 times sales, according to...”
“Model routers like Not Diamond, Martian and OpenRouter are private companies focused on delivering cost savings for enterprise AI customers ...”
“© 2026 Versant Media, LLC. All Rights Reserved. A Versant Media Company....”
Ontology Mapping & Concepts
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