Cloudflare CEO Says the Internet Is Changing Exponentially

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Jon Quast, Matt Frankel, and Tyler Crowe discuss:

• Agentic AI internet traffic surpasses human traffic.
• The investment opportunities increase exponentially if agentic traffic increases.
• The government's investment in mining education.
• Whether there are buying opportunities for mining stocks.
• Why Intel is raising cash.

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A full transcript is below.

This podcast was recorded on Aug. 11, 2026.

Jon Quast: The Internet might be about to get weird. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host today, Jon Quast. Joining me today are guests, longtime Fool contributors Matt Frankel and Tyler Crowe. Me and Tyler are switching seats today. But today, we're talking about some mining stocks, as well as a $15 billion move from Intel.

But first, I want to talk about this bit of news. Earnings season always a busy time, and sometimes things get lost in the commotion. One of the things that I feel like got lost was when Cloudflare reported its second-quarter earnings on August 6th. Now, this is a top 10-ranked stock in the Motley Fool Hidden Gems universe. But the report was great; investors responded fine, but buried in the earnings commentary on the call, co-founder and CEO Matthew Prince was talking about AI-agentic traffic on the Internet. Saying that for the first time, AI agents surpassed human activity on its network in May. The company had projected this to happen already, but it's happening faster than its timeline. Then they went on to say that they actually expect AI agent traffic on the web to be 1,000 times bigger than human traffic within the next five years. Growth is something that is so important to investing. It's something that caught my eye when I saw this statement. But Matt and Tyler, I want to get your reactions first here. What do you think about this statement from Matthew Prince?

Matt Frankel: On one hand, I understand the logic, even though I think the 1,000x figure might be a little bit too ambitious. The agentic AI traffic, it increased by about 18x over the past 12 months, and 1,000 times in five years would mean roughly quadrupling every year for the next five years. That would actually be a deceleration from what we've seen. There's also the case to be made that human Internet traffic has a natural ceiling. We can only look up so much stuff. We can only perform so many tasks at a time. There's a reason that human-driven Internet traffic has only grown at a low single-digit rate for about the past decade. Agents don't have this natural ceiling. It only depends on the cost of doing the work. How many tasks we give them to do. Obviously, there's no limit to the ladder there. Costs are falling, and usage is rising 1,000x in five years. As I mentioned, it could be a stretch, but the costs are certainly heading in the right direction. The token costs: they've dropped by an order of magnitude over the past two years, and we've seen roughly a 100x increase in usage. If that pattern of decreasing cost continues, agentic AI usage could soar. I don't know about 1,000x, but a lot higher.

Tyler Crowe: I want to compare this to that. If you double a penny every day for a month, we have like $5.6 million. Yes, the math says it works out that way, and doubling early numbers, like we've seen recently, makes sense. But eventually, that pace does become somewhat unsustainable. We see this investing all the time: the S-curve of investing, things accelerate, and then they eventually decelerate. We see it with companies, revenue trajectories, all the time. Because agentic web traffic is happening behind the scenes doesn't mean it's without cost. Yes, costs are declining, but there is cost to it, and there will be some inflection point where the compute costs for all this agentic web traffic impede growth. Someone somewhere looking at their AI cost spending will need to see an ROI on this. For all this bought traffic, that's what they're doing; eventually, they're going to have to see a return. If they're not seeing it, they're not going to be spending on it because otherwise, what's the point?

Jon Quast: It sounds like both of you then are a little bit skeptical on the 1,000x number, and that's fair. If you believe that Cloudflare is blowing some smoke here, feel free to say so. But I do want to imagine here. I do want to project. I want to look into the future. Let's say, by 2030, if at least this is directionally right that the share of agentic AI traffic is going to continue to increase at a large rate compared to the human traffic — will the Internet look different in five years? What changes would happen? What would be different from our perspective? What would it look like?

Matt Frankel: Like I said, I'm not totally sold on the 1,000x figure or that it's going to be anything close to that. But let's assume for a minute that that proves to be accurate. The main thing that I see that would be very different is how money is made on the Internet. In Prince's comments, he correctly says that the general business model of the Internet has been defined by advertising for almost three decades, and this could change. If 0.01% of your views are going to be human, then why would you advertise as if humans were going to be looking at your page? I'm not exactly sure what that might look like, but advertisers would need to figure out new ways to reach customers in an agentic world, maybe reach them through agents. The ways that publishers sell ad space based on impressions might not work well anymore if only one or two out of every 10,000 impressions is made to a human being.

Jon Quast: I mean, when you think about how much of the Internet is built around this whole concept of advertising and being open in that way, that is actually a really profound change that would possibly be occurring there, Matt. I appreciate you bringing that up, but Tyler, I want you to weigh in here as well.

Tyler Crowe: I'm probably going to sound like a curmudgeon throughout most of this segment, but I am taking the under on this 1,000x AI agent traffic. This really does sound like Prince is talking his book, because obviously, Cloudflare would benefit immensely from exponential web traffic growth. It's not what he's saying, but why he might be saying it. A little bit of the incentives matter in these statements. In terms of changing the Internet, we've already seen this happen with mobile-friendly webpages in the explosion of search engine optimization for the past seven to 10 years. We have that hamburger-looking drop-down menu; that's because we wanted mobile-friendly design for search engine optimization.

Web pages are written for two audiences: you have the human, and then you have the Google's search engine algorithm. If you've ever wondered why a single online recipe page became a 10,000-word novella. They're witnessing like an SEO nuclear arms race in full effect. Pieces are scored better with keywords and phrases without much penalty for length. You get to this point, and Herman Melville will almost be like, I might want to cut that down a little bit. Projecting this agentic web search in assuming Princes, I don't know, directionally correct with what he's saying here. We're going to get AI agent-optimized webpages. If I'm building a site where I know so little of my traffic is human, why would I even build it for humans?

Jon Quast: That's such a good comparison on the shift that we made to mobile web. That, of course, created lots of opportunities in the market. There were profound changes that happened to the Internet, and there were companies that made money and investors who won. I think that's really what our listeners care about most here as we consider how the Internet might be changing and the changes that we're already seeing. I want to leave this final question here for both of you. If we are going to start building a web that is focused towards these agents. What might that create as far as investing opportunities?

Matt Frankel: If overall Internet traffic is about 1,000x, I'm most bullish on the companies that make the infrastructure work. I'm talking about the companies that provide the power infrastructure data centers need. The cooling systems, which is becoming an increasing problem as they get more complex and dense; the heat island thing is a real problem. Other things that will likely surge in demand, if that 1,000x prediction is correct, but I would caution that even if we're directionally correct about this opportunity, agentic AI really taking over Internet traffic, the valuation of all these stocks still matters. Some of my favorite AI infrastructure companies are trading for pretty high multiples right now, especially for a value investor like me. As an example, everybody was 100% correct that the Internet was going to revolutionize the world in 1999. It took Cisco 17 years to come back to its previous high after the bubble burst. GE Vernova, Quanta Services — those are two companies that come to mind that I would love to own, but I'd probably wait for a more attractive valuation before you'll actually find them in my portfolio.

Jon Quast: How about you, Tyler?

Tyler Crowe: Jon, I apologize in advance because I'm going to commit one of the worst sins in media. I'm going to say I'm not really sure yet. I know it's happening. I'm still trying to wrap my head around the mechanics of it. Yes, it does support the AI infrastructure build-out narrative. But isn't that already baked into AI's potential in the current compute demand projections that we have out there? Maybe this is an added data point that the AI infrastructure build-out has that extra leg to stand on, and maybe we don't have to worry as much about, oh, this is all super inflated because now we're starting to see some tangible things.

But ad revenue business that you were talking about, I'm thinking almost like on a theoretical basis because we've seen companies like The Trade Desk get absolutely hammered because of walled gardens and the way that the advertising business has shifted, and this would seem to make it a lot worse. But there is going to be an opportunity for somebody like that, who can discern between a human and a clanker who's bringing your web traffic to your website. If you can deliver ads for the right person, or if there is some way to influence AI agents with not necessarily the advertising that we think of today, but some way to influence the way that AI agents make executive decisions based on what is presented, there is probably some opportunities there as well. Again, this is to me, it's a little theoretical. I haven't really seen the effective business plan that executes this well, but why I'm struggling with this and why I'm saying I need to see more of what's out in the market available.

Jon Quast: Well, Tyler, I'll go ahead and forgive you because I think that humility is one of the most important traits an investor can have in saying, I don't know yet is intellectually honest, so I'll allow it.

Tyler Crowe: I said that on CNBC once, like 12 years ago, and I haven't been invited back since, so I'm pretty sure you're not supposed to do it.

Jon Quast: We'll invite you back on this podcast, but that's it for this segment. After the break, we're going to dig in to some mining stocks. You're listening to Motley Fool Hidden Gems Investing.

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Jon Quast: Welcome back to Motley Fool Hidden Gems Investing. The Trump administration over the weekend, making some big announcements regarding mining, and there are some mining stocks that are up today. I want to talk about this for a moment. There is, of course, the geopolitical angle here. The USA gets a lot of its minerals from China. Of course, it would like to be less reliant on that. One of the things that appears to be holding our country back is the workforce. According to some reports, China graduates over 3,000 mining engineers annually, and compared to the U.S., the USA is far fewer, at only about fewer than 170 annually. One of the interesting things here is that it's projected that perhaps half of the educated mining workforce is going to be retiring within the next three years. Labor seems to be an issue, the Trump administration committing $100 million to education. I want to get y'all's reactions here to that.

Matt Frankel: We're going to switch roles. I feel like I'm going to be the curmudgeon in this section. The problem here isn't tuition. It's that mining is a highly cyclical industry. Jobs can be in very remote areas where nobody in the U.S. lives. There have been stretches where it was impossible for new grads to find a job in the industry. I want to say the whole 2015 to 2020 era was really difficult for the mining industry. This is why there were about 1,500 people enrolled in mining engineering programs in 2015, and now there are fewer than 600. It's not that interest in high-paying jobs has evaporated. It's the industry showed people that this is not as stable as you might think.

Plus, when you say that half of mining engineers are set to retire within three years, it takes four years, at least — let's be realistic. Most people take closer to five to get through college these days. It takes four years to get a mining degree. I'm not sure the timing really works as much as the Trump administration wants to say here. I understand the national security angle. Same thing we've gone through with the chipmakers, but I'm not sure this will do enough to attract thousands of new students. Tyler, bring us home some optimism here.

Tyler Crowe: Someone who spent eight years in college, that five years is a nice term. All I'll say is on the remote stuff, too, though, I've spent the last seven years outside the United States for my wife's work, and I'll say that working remote places certainly has its perks. I can't be said that I'm not a wife guy, 'cause I'm definitely thanking her for doing that. Also, I'm being a little tongue-in-cheek here, but the threat of AI jobs apocalypse certainly helps making the case for this work. Be a professional that might get your job eaten by AI, or I don't know, go work in Alaska for a little while. See if this has a tangible impact on employment and mining activity in the United States. I'm a little dubious.

Mining is like the AI in the sense that no one wants to live next to a data center or tungsten mine. Let me give one example. I grew up in New Hampshire, neighboring the state of Maine. Maine has one of the largest lithium deposits in North America, but state laws make it effectively impossible to build a mine to actually extract it. Whether that changes, we don't know. It could, but I have my doubts because there's a lot of NIMBY that's involved with mining as well. There is a lot of things that need to happen for an American mining renaissance that doesn't seem to be in what these deals that we've been seeing happening. It's going to take a lot more than money and some new engineers.

Jon Quast: This isn't a topic I don't think I would normally highlight here for the podcast, but we did have Tyler subbing in today, and Tyler, of course, is our resident expert when it comes to mining. I think that's important because I don't think many of us really understand the business of mining, the economics of mining. I think a lot of us, such as myself, to see a $3 billion investment from the U.S. government and say, that must be bullish for the mining stocks. But Tyler, I want you to temper us a little bit. Explain to us what we should be thinking.

Tyler Crowe: Sure. I'm going to again put on my cranky pants. Look, part of the announcement that we saw there was this $3 billion investment from the government- some to education, some stuff. $1.4 billion of it is going to a start-up that actually isn't in mining. Of that $1.4 billion is a Department of Energy loan for a start-up lithium-ion battery company. It's not public, and it makes silicon anodes for batteries. Now, if you squint really hard, you might be able to make the case for increased mining, but that's for quartz and silica, which isn't exactly what we're talking about here with rare-earth minerals and these super hard-to-extract things. Silicon and quartz are relatively easy.

My word of caution: I sat on the editor desk of Energy Materials for fool.com for a while. The one thing I guarantee we will see from this is a bunch of hopes and prayers mining companies go public. They will claim to have the largest reserve of XYZ mineral, and their investor desks will be stuffed with projected material demand and cost curves and all the stuff to get investors excited, but there won't be little in terms of what they will do as a business in profitability. More often than not, they are siren songs, and the chances of finding that one that actually becomes a revenue-generating, profit-generating entity is the same odds as a lottery ticket, and honestly, the returns on those aren't as good as lottery tickets. I think, honestly, better to strap yourself to the mast and sail past as best as you can.

If it does end up making it as a viable mining company, it will hit some low in the mining cycle because it's a cyclical industry, and maybe then it'll be a worthwhile investment. But investing in a bunch of start-up mining companies that are on hopes and prayers, I think you have better ways to spend the money.

Jon Quast: I will definitely take advice from somebody who has spent a lot of time thinking about this, whereas I have not. Coming up after the break, Intel is raising some cash. You're listening to Motley Fool Hidden Gems Investing.

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Jon Quast: Welcome back to Motley Fool Hidden Gems Investing. We do want to make you a part of the conversation. If you have a stock or an investing topic that you would like to ask any of our analysts and panel members on any single episode of this show, feel free to email us at podcast@fool.com. We ask that you keep your questions somewhat short so we can read them on air, keep them Foolish. Remember, we can't give personalized investing advice more general. But if you want to bring in a question, email that to us at podcast@fool.com. Actually, our mailbag was a little thin today. We're skipping over that, going with a third topic here.

We saw today that Intel announcing it is going to be raising some cash. The stock is down a little bit today on this news, but it is going to be selling some equity to raise $15 billion. The jargon in the announcement says capex, general working capital. But there is a why-now section in which Intel said progress in emerging areas, including physical AI. This would be like robots or something that is using AI in the physical world. Physical AI purpose built silicone, so their own custom stuff. Advanced packaging and external wafers represent significant growth opportunities for Intel. Matt, is this a move that you like from Intel raising cash?

Matt Frankel: Short answer is that I am a big fan of this move, and I'm generally a fan of issuing equity for most companies when a stock is expensive. Throughout its history, Tesla has done this arguably better than anyone. I've said many times that their valuation is one of their biggest assets, the ability to raise a lot of capital without a lot of dilution. There are some companies that literally survived the last bear market, specifically because they raised capital when their stocks got bubbly in 2021. Think of Lemonade as one company that I follow. They did a really smart capital raise right around the peak, and it's why they have $1 billion on their balance sheet today.

In Intel's case, specifically, that $15 billion raise sounds like a lot of money, and it is. I would love to have $15 billion, but it represents less than 3% dilution at the current market value of the company. It prevents them from taking on additional debt to capture some of those opportunities. Speaking of those opportunities, you mentioned they specifically cited progress in several areas; especially in my mind, external wafers is the biggest one there. That implies that the third-party foundry business is coming along quicker than even they thought. That's been a major part of the investment thesis. Intel's growth over the past year, in terms of revenue, doesn't justify its 5x stock price. It's that third-party foundry business, and that's really what seems to be wrapping up here that they need money.

Jon Quast: It's the inverse situation of watching a CFO buy back shares at ridiculously high valuations. Behavior like that makes me want to gather up a posse with torches and pit for its. Look, if you're going to dilute shareholders, which is never really objectively a good thing, but if you're going to do it, might as well do it from a position of strength. Then wait until you're desperate for cash. Intel's stock is up 395% in the past year. It's raised its capex plan to $20 billion for this year alone. For 2027, they're saying it's going to be significantly higher. This was on its conference call a couple of days ago. That is way more than what it's bringing in operating cash right now. Better to do it now than wait and potentially have the market turn on you and have to issue more shares for the same effect.

Tyler Crowe: Intel's valuation certainly plays a part here. I was looking at the 10-year average for its price-to-sales valuation, and it's traded at an average of three times as sales over the last 10 years. Right now, trading at eight times at sales, and so that's more than double what its long-term average is. That's after it's already come down some. Definitely a higher valuation than what we're used to, definitely selling some equity at those higher levels to fund its capital expenditures that it has planned. But one of the interesting things here that I thought of when I saw this was that actually the S&P 500, the dividend yield for it right now, according to some reports, hitting an all-time low of 1.04%. In dividend yield, if it's low, that's indicating a high stock price or a high valuation for the stock price. It's not perfectly that way, but it does suggest that. I'm wondering if the S&P 500 there is one indication here saying, we're actually very highly valued as a market. Do you think that we're going to see some more dilution, not from Intel, but from other companies if it's generally a very hot market right now?

Matt Frankel: I would argue that we've already seen that. Alphabet recently raised $45 billion in equity. Berkshire Hathaway took 10 billion of that. Overall, US equity raises were 67% higher in the first half of 2026 in the same period last year. That doesn't even include the record-breaking IPO market that we've seen, led by SpaceX, but there have been others. To answer your question a little more directly, yes, I expect more, but not because of opportunistic valuations. It's also a need-based capital-raising time. The rapid buildout of that AI infrastructure it's created a need for many companies to raise billions and billions of dollars. Some will be raised in the form of debt, which we've seen with some of the big tech companies already.

But I do foresee a lot of equity raises. Convertible bond offerings tend to become really popular in times like these, and we've already seen a bunch of those, and I see a lot of this thing in the second half. Nothing sounds worse to me than a convertible bond offering. That sense never ends up working out well for anybody. Like you said, it's not Alphabet, and it's not equity. We're seeing debt, we're seeing equity, we're seeing a bunch of off-balance-sheet financing, a lot of like these. We guarantee the lease things that entities and tenants are starting to do. It's hard to see a path where companies don't have to go to the financial market repeatedly over the next several years if they stick to their current spending plans. Everyone's talking about more, more, more, more; their current cash flows aren't supporting it, and it's hard to see how they're going to do it even with future growth in operating cash flow. Their spending plans are almost inevitably going to outpace it based on what they're saying.

I think the only reason that that would change is if the market cries Oracle in some way or other. I'll give you an example: Oracle's credit rating was downgraded from the lowest investment credit grade rating you can get. Now, does its spending plans change if it does finally get downgraded to junk status? Probably. Because that's when we start to look at cost of capital getting much, much higher. That's when you have to start thinking twice because then all of a sudden, these theoretical ROIs really have to start making more sense. As long as we see the current trajectory, as long as valuations are high and everyone's hunky dory about all this, we're going to see it for a while. But if we see some altering event like a credit downgrade or something like that, that is going to make somebody blink, and that's when we're going to see an alteration in its spending plans.

Jon Quast: We're definitely going to keep an eye on somebody blinking, and when they do, we'll bring that to this podcast. That's all the time that we have for today.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Pool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. See our full advertising disclosure; please check out our show notes. Thanks to our producer, Kristi Waterworth, and the rest of The Motley Fool team. For Matt, Tyler, and myself, thank you so much for listening to our show today, and we will see you again next time.

Jon Quast has positions in Lemonade. Matt Frankel, CFP® has positions in Berkshire Hathaway, Lemonade, and Oracle and has the following options: short September 2026 $140 calls on Lemonade. Tyler Crowe has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Cisco Systems, Cloudflare, GE Vernova, Intel, Lemonade, Oracle, Quanta Services, and The Trade Desk. The Motley Fool has a disclosure policy.