AI Wave Swallows Humans as Goldman Trader Warns of Computing Power Shift

Goldman Sachs' top TMT trader Peter Callahan has sounded a warning about the growing dominance of artificial intelligence in internet traffic. According to Cloudflare, non-human traffic, bots, crawlers, and AI agents, is now surpassing human traffic, with projections indicating it will be 1,000 times greater than human traffic within five years.

Callahan notes that this shift is reflected in the stock performance of hardware segments, particularly optical stocks and memory stocks. While both suffered significant drawdowns in July, their paths diverged dramatically entering August, with optical stocks outperforming memory stocks by over 20 percentage points.

The trend is driven by a surge in demand for computing power during the AI inference phase, with the explosion in optical interconnect demand far exceeding prior expectations. This has led to a repricing of computing power demand, with open-source models delivering superior performance at less than 8% of the cost of closed-source models.

Nvidia (NVDA) surged 11.5% last week, its best weekly performance since May 2025, and Callahan believes that the upcoming Vera Rubin architecture launch could be a catalyst for catch-up gains in the GPU market.