Goldman Sachs' TMT trading specialist Peter Callahan said on August 12 that the AI narrative within the software sector is shifting after the latest earnings season. While the market previously feared generative AI would erode traditional software companies' moats, data infrastructure and developer tools companies are now seeing the pendulum swing from "AI headwinds" to "AI tailwinds." Firms including Cloudflare, Palantir, Datadog, Twilio, and Atlassian have drawn more attention, while traditional SaaS application vendors still need to prove they can establish a similarly clear AI-beneficiary logic. Callahan attributed the change to AI commercialization extending from model training into inference, agents, and automation applications. Cloudflare disclosed that non-human traffic has surpassed human traffic and projected that machine-generated web requests will keep growing rapidly if current trends hold. The implication is that AI is not necessarily just a replacement for software companies; platforms carrying data, APIs, web traffic, security, and developer tools may see growing agent counts and call frequencies become new demand sources. The software sector is now showing clear divergence: whether AI is a tailwind increasingly depends on whether a company sits in the application or infrastructure layer, and whether it can directly monetize AI-related traffic growth. (Source: BlockBeats, Jinshi)
According to BlockBeats, Peter Callahan, Goldman Sachs' TMT trading specialist, said on August 12 that the AI narrative inside the software sector is changing after the latest earnings season. Earlier, the market was more worried that generative AI would weaken the moats of traditional software companies. Now, data infrastructure and developer tools are moving from "AI headwinds" to "AI tailwinds." Companies such as Cloudflare, Palantir, Datadog, Twilio, and Atlassian are drawing more attention. Traditional SaaS application vendors, by contrast, still have to prove they can build an equally clear AI-beneficiary story.
Callahan sees the shift as part of a broader move: AI commercialization is extending from model training to inference, agents, and automated applications. Cloudflare has disclosed that non-human traffic already exceeds human traffic, and the company expects machine-generated web requests to keep climbing fast if current trends continue.
That suggests AI is not necessarily just a replacement for software companies. For platforms that carry data, APIs, web traffic, security, and developer tooling, an increase in agent counts and call frequency could itself become a new source of demand. The software industry is now diverging: whether AI is a positive increasingly depends on whether a firm operates at the application layer or the infrastructure layer, and whether it can directly monetize AI-driven traffic growth. (Jinshi)
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