Blue Owl says software's AI woes are for equity investors, not lenders like itself

Blue Owl Capital, the largest private credit manager globally, has found itself at the center of mounting investor anxiety regarding artificial intelligence's potential to disrupt software companies that have become major borrowers in the private credit market. On February 5, 2026, co-CEO Mark Lipschultz sought to calm markets by asserting that AI could not materially impair software and technology-linked businesses, dismissing fears that have roiled the broader alternative lending industry. His comments came in response to a significant market dislocation: software and services stocks in the S&P 500 have declined by over $800 billion in value since January 28, and secondary loan prices for software company debt have fallen measurably, raising questions about the stability of private credit portfolios.

The scale of exposure is material. Software firms represent approximately 20% of all loans issued by private credit funds, making them a consequential segment for managers like Blue Owl, Apollo Global Management, and BlackRock. Importantly, however, Lipschultz emphasized that software comprises only 8% of Blue Owl's total assets under management, positioning the firm as less exposed than some competitors. The CEO cited stable performance and minimal losses in the firm's software segment during the fourth quarter earnings call, signaling confidence that underlying credit fundamentals remain intact despite public market turmoil. Nevertheless, the market has expressed skepticism: Blue Owl's stock fell 2.4% on the day of the announcement and has declined over 50% year-to-date, while investors have begun requesting redemptions from certain Blue Owl funds.

The broader private credit market is experiencing its first meaningful stress test since explosive growth beginning in the mid-2010s. Barclays and UBS analysts issued formal warnings this week about heightened default risks on software loans, noting that valuations in the secondary market have diverged sharply from fund manager marks. This dynamic creates a credibility problem: if secondary market prices suggest loans are worth 20% less than book value, investor confidence erodes regardless of manager commentary on fundamental credit quality. The private credit industry has never experienced a sustained down cycle, according to Harvard Law School professor Jared Ellias, amplifying investor anxiety about unknown risks embedded in opaque, illiquid portfolios.

Despite the market turmoil, Blue Owl's underlying business metrics remain resilient. The firm reported fourth-quarter adjusted earnings per share of $0.24, beating consensus estimates of $0.22, driven by strong performance in credit and real assets segments. New capital commitments reached $17.3 billion in the quarter, and total AUM surpassed $300 billion. Oppenheimer analysts noted the company's steady absolute growth and resilience in private credit demand despite tightening lending conditions. However, the apparent disconnect between these operational metrics and the firm's deteriorating stock price reflects broader market concern that software loan losses, should they materialize, could be severe enough to offset near-term fundraising and fee revenue strength.