As the world shifts to AI-driven industries, success lingers on the ability to evolve and compete more intelligently. In a similar context, Microsoft AI CEO Mustafa Suleyman has expressed how the next chapter of the AI industry will not be written by the ones who can build the smartest model but with something else.
In a recent post on X, Microsoft AI CEO Mustafa has brought the attention of the world to something quite fascinating. He wrote that AI industries will not be driven by the sheer smartness of the models but by whoever can afford to run one at a larger scale.
He wrote, “For the next couple years at least, the entire AI industry is going to be defined by this fact: demand is going to wildly outstrip supply, and so what matters is which companies / products have margin to pay for tokens.”
He further added, “Those products will then rapidly improve because latency drives retention, and retention creates data to spin flywheels that improve the product and drive more adoption.”
For the longest time it was believed that the smartest model developed will fetch the highest popularity. But now in 2026 the real challenge lies in order to run those models in real time.
Several reports indicate that inference workloads already make up around two-thirds of total AI compute spending. This is what has put the spotlight on how running AI systems at scale has become the real primary challenge.
The AI industry is growing very fast, but the basic things needed to run it are not keeping up. GPUs are in short supply, so companies sometimes have to wait almost a year to get them. High-bandwidth memory is also facing limited production, and global data center expansion is struggling to match the pace with demand.
All of these combined have become the disadvantage of the AI industry which once was one of the greatest creations. This overall has resulted in a huge gap between the AI demand and accessible resources.
Mustafa’s approach to such a situation is what he calls a ‘flywheel effect’. It is a simple idea where one success leads to another, creating a self-reinforcing cycle.
Companies like Microsoft follow the cycle of: Invest heavily on infrastructure, that offers faster AI services, Attracts more users which in turn produces more revenues and with that revenue the company reinvests into better systems.
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