Is the AI Triggered Meltdown In Private Credit Overblown?

The offices of Blue Owl are in New York on Saturday, April 4, 2026. (AP Photo/Ted Shaffrey)

Pulling Back The Curtain On The AI SaaSpocalypse

Fear that artificial intelligence will render traditional software subscriptions obsolete has driven a broad and, in many cases, deeply indiscriminate selloff across the software sector. Companies with strong fundamentals, sticky customer bases, and genuine AI integration strategies have been marked down alongside those with legitimate structural vulnerabilities. It’s a classic case of sentiment-driven dislocation rather than rational repricing. For investors willing to look past the noise, the current environment is shaping up to be exactly the kind of moment where long-term opportunities can appear.

What is less discussed is how that same anxiety is now rippling through the roughly $3 trillion global private credit market, which spent the better part of a decade lending aggressively to the same software companies now under pressure in public markets. Headline risks in the space have risen, investment gates have come up, and some retail investors are scrambling to try to pull their capital out. We firmly believe the risks for the space need to be put in context: private credit has always been a high-yield, higher-volatility asset class, and investors who understood what they were buying have historically been well-compensated for accepting that risk.

The current stress is a feature of the asset class and one of the primary reasons why yields in the space have generally outpaced those in the public markets.

How Private Credit Ended Up At Odds With AI

The rise of private credit over the past decade is one of the defining financial trends of the post-GFC era. As traditional banks retreated from middle-market lending following the GFC, a new class of non-bank lenders rushed in to fill the gap. Business development companies, or BDCs, became the vehicle through which much…

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