Carlyle Group Inc, the fourth largest listed private equity, private credit, real estate and infrastructure group and the second largest private credit alternative asset manager in terms of managed private credit assets in the world, has invested a large part of its newly raised private credit funds in loans to mid and large capitalization artificial intelligence, AI technology companies, private equity buyouts of AI technology companies and lending to buy and invest in AI data centers and AI energy infrastructure.
The private credit loans in which Carlyle is most active in giving out to AI technology firms carry interest rates of usually 7 % to 15 %. By giving out private credit to AI firms Carlyle essentially takes on financial leverage, because at such high interest rates the tens of billions of USDs of private credit loans Carlyle disburses each recent year could be completely wiped out since they are high on the capital structure of the AI technology firms that receive these very high interest of 7 % to 15 % loans. Since Carlyle is the second largest alternative asset manager in terms of private credit assets under management in the world managing 208 billion USDs in private credit, this makes Carlyle deeply financially leveraged on the AI technology sector.
Carlyle also makes billions of USDs of private equity buyouts of technology firms a year. Since only 30 % of these investments is via an equity down payment and the rest is borrowed debt via bank lending and high yield bonds, Carlyle's private equity investments are also leveraged.
Artificial technology, AI as most technology investments is operationally leveraged. That said, the leading hyperscalers Amazon, Microsoft, Alphabet and Meta are investing circa 25 billions USDs a year in AI data center infrastructure, which makes them a capital intensive business. A similar capital intensive AI investments trend is observed in mid sized AI technology firms. That said, AI technology still provides operational leverage. And AI firms are still valued as not capital intensive technology firms by Wall Street equity research analysts and investors and Silicon valley technology investors and technologists.
So Carlyle is double leveraged via financial borrowing leverage and technology operational leverage on AI in its assets under management investments.
If the AI boom continues to flourish, Carlyle's market capitalization could reach 109 billion USDs.
If the AI boom turns into a bust and the Nasdaq Composite falls more than 62 % from its recent peak, Carlyle's market capitalization could fall to 9 billion USDs from the current 23.65 billion USDs Carlyle market capitalization. , according to Wolfteam Ltd.'s projections and estimates.
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