What If The Private Credit AI Boom Turns Into A Bust?

The largest private credit asset managers Blackstone, KKR, Apollo, BlackRock, Carlyle, Blue Owl, Ares, Partners Group, EQT, CVC, TPG etc. have invested large part of their private credit assets under management in artificial intelligence, AI data center projects, namely hundreds of billions of USDs.

Also they invest large part of their newly raised private credit assets in AI data center infrastructure.

If the artificial intelligence, AI boom turns into a bust defined by the Nasdaq Composite as falling 62 % from its recent peak,  the largest private credit asset managers Blackstone, KKR, Apollo, BlackRock, Carlyle, Blue Owl, Ares, Partners Group, EQT, CVC, TPG etc. and mid sized and smaller private credit issuers could face solvency crises.

Because they will not be able to realize gain on their private credit, private equity and real estate assets under management invested in  artificial intelligence, AI data center projects and will not be able to pay carry, net realized gains from their AI investments to their investment and other staff, their staff members could start fleeing to other firms.

This will in its own effect hinder the asset raising process of  the largest private credit asset managers Blackstone, KKR, Apollo, BlackRock, Carlyle, Blue Owl, Ares, Partners Group, EQT, CVC, TPG etc. and mid sized and smaller private credit, private equity asset managers and they will face solvency issues.

Once the circa 10 trillion USDs assets under management private equity industry starts experiencing problems this could well cause large loan losses to global banks s JPMorgan, Bank of America, Citigroup, Wells Fargo, Barclays, Deutsche Bank, HSBC, BNP Paribas, Societe Generale, Goldman Sachs and Morgan Stanley etc. which have financed the private equity, private credit deals to a large extent with loans to the private equity portfolio companies.

So if the AI boom turns into a bust, the solvency of JPMorgan, Bank of America, Citigroup, Wells Fargo, Barclays, Deutsche Bank, HSBC, BNP Paraibas, Societe Generale, Goldman Sachs and Morgan Stanley could be threatened. Their market capitalization could start falling and this could create a vicious circle as in the Great Recession of 2008.

But for now the AI boom is in full swing. 

Private Credit And The AI Boom

 

The largest private credit companies recently reported their 2 quarter 2026 results.

The main theme was that a large part of the private credit's industry raised funds go into financing artificial intelligence, AI data centers, energy companies powering data centers and infrastructure companies that build out the data center boom.

Artificial intelligence, AI centers are central for investors' interest. That is why the giants of the private credit industry invest in AI, out of fear of missing out on a market beating opportunity.

The tens of billions of USDs going from private credit firms' assets under management into AI data centers projects annually risk stoking a bubble, but for now they are providing excellent returns and are not threatening the private credit industry's returns.

Who Pays For The AI Boom?

 

The hyperscalers, namely Alphabet, Amazon, Microsoft and Meta are the companies that give out most money to finance capital expenditures on artificial intelligence, AI mainly in the form of building out artificial intelligence, AI data centers and the accompanying infrastructure.

The second pillar that pays for the AI boom are the spending on AI compute tokens by corporations and individuals.

In 2026 Alphabet will spend circa 185 billion USDs, Meta will spend circa 130 billion USDs, Amazon will spend circa 200 billion USDs, Microsoft will spend circa 150 billion USDs.  

In 2027 Alphabet plans to spend circa 255 billion USDs, Meta plans to spend circa 170 billion USDs, Amazon plans to spend circa 230 billion USDs and Microsoft plans to spend circa 200 billion USDs according to analyst projections and WSJ and FactSet data estimates.

NVIDIA and SpaceX are also planning multi billion USDs capital expenditures on artificial intelligence, AI.

How are the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta basically able to afford to spend more than 100 billion USDs a year, sometimes several hundreds of billions of USDs a year on artificial intelligence, AI capital expenditures?

The hyperscalers, namely Alphabet, Amazon, Microsoft and Meta each have more than 40 billion USDs on their balance sheet in the form of cash and short-term investments. In some cases of the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta have even close or more than 100 billion USDs in cash and short-term investments.

In addition, the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta plan to issue new equity as Alphabet did. Alphabet plans to raise 80 billion USDs of new equity to finance AI capital expenditures.

Are such huge multi billion USDs capital expenditures sustainable? 

Not according to some media reports.

Not in the long run. Up until now the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta have been valued at more than 1 trillion USDs each because they were huge growth and multi billion USDs net profit cash generating machines. And they were asset light. Now, however, the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta are becoming asset heavy with huge, multi billion investments in artificial intelligence, AI compute and data centers.

Moody's recently published a report saying that the large capital expenditures by the hyperscalers could threaten the credit quality of Microsoft, Amazon, Alphabet, Meta, Oracle and CoreWeave. 

It is not unfforeseeable that soon, in 2-4 years the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta could start reporting yearly losses if they continue to invest close to 100 billion USDs or more each in AI infrastructure.

This will in turn affect their valuations and market capitalization.

If the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta start making yearly losses their market capitalization could fall by more than 44 % from the current levels. Simply because the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta from making huge profits will turn into loss making enterprises.

If, on other hand in 5 to 7 years the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta's multi billion USDs investments in artificial intelligence, AI compute and data centers turn out to be cash positive, starts making hundreds of billions of profits for the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta, then the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta' market capitalization could more than double from current levels.

However, in order for the AI capital expenditure to return multi fold its money, the AI boom not only has to continue, but artificial intelligence, AI has to infiltrate almost every area of our lives, make us much more productive and able to enjoy leisure.

And not only that. Artificial intelligence has basically to devour other industries and start producing their revenue.

And now that is a bit farfetched assumption requiring quite a stretch of the imagination.

So, basically, the hyperscalers, namely Alphabet, Amazon, Microsoft and Meta are taking on a big risk with their multi billion USD investments each of them makes in artificial intelligence, AI compute and data centers.

NVIDIA and SpaceX also take on a big risk with their  artificial intelligence, AI compute and data centers investments.

The risk could turn out positive and AI could make extraordinary progress and build huge amounts of profits. 

Or the AI boom could turn into a bust defined by the Nasdaq Composite falling more than 62 % from its recent peak.

The second pillar which pays for the artificial intelligence, AI boom are corporations and individual consumers, who buy the AI compute tokens.

This is already a tens of billions of USDs industry as OpenAI and Anthropic apparently have 25 billion USD and 47 billion USD annual revenue run rates respectively.

However, the AI token industry is unprofitable as OpenAI for example recorded a 38.5 billion USD loss in 2025.

If the AI token industry does not become profitable, this could threaten the viability of the AI boom and the AI boom could turn into a bust, defined by the Nasdaq Composite falling 62 % or more from its recent peak. 

 

Tesla Derives Much Of Its Value From Implicit And Explicit Subsidies. Valuation Upon That Premise

Tesla car buyers and Tesla itself gets indirect subsidies in the form of emission credits.

Since 2008 Tesla got around 14.3 billion USDs of emission credits disbursed by the US government from money gotten from the other combustion engine automobile producers active in the USA.

Without these 14.3 billion USDs Tesla would have most probably been unprofitable.

In addition Tesla got an estimated 3.4 billion USDs from an $7,500 tax credit for EV buyers which ended in 2019. This perk essentially allowed Tesla to sell American-made electrical vehicle at a higher price than manufacturing without the subsidy would have allowed. 

Elon Musk himself admitted that Tesla was on the verge of bankruptcy in 2019.

In short, Tesla's intrinsic worth is 120 billion USD and this is the value of the electric vehicle technology itself. Because Tesla would be unprofitable, loss making without the implicit and explicit government subsidies.

The issue is the electric vehicle engine requires large quantities of ferrous metals, namely lithium, cobalt, nickel copper and other expensive ferrous metals. This makes producing electric vehicles currently unprofitable, Basically, if a car company produces electric vehicles without implicit and explicit government subsidies the automobile manufacturer looses money. 

Essentially, Tesla and electric vehicle manufacturers essentially need to achieve a technological, engineering breakthrough to produce electric cars profitably.

If Tesla does not achieve a technological breakthrough, its value could go to 0, zero. It could become insolvent.

A lot of the value of Tesla, according to Wall Street investors and equity research analysts and Silicon valley investors and technologists comes from the promise of robotized taxi manufacturing and humanoid robots production by Tesla.

This is basically an option on the future. A claim on a future technological breakthrough to produce robotized taxis and humanoid robots. Self-driving cars have been a goal of the car manufacturing industry since the 1950's when the head of Daimler, the producer of the Mercedez brand said that self-driving cars will be a reality in 30 years.

Yes. If Tesla achieves a technological breakthrough and starts producing electrical vehicles and starts producing robotized taxis and humanoid robots, than it might substantiate its current market capitalization.

Can Private Credit Recover From The Current Crisis?

 

If artificial intelligence, AI does not prove to be a bubble and does not burst, defined by the Nasdaq Composite falling 62 % or more, private credit asset managers will recover their balance and most of their positions.

If AI proves to be the largest bubble in history and bursts, the constant capital raising and investing and buying up high interest credit and companies along and selling them off in opportune times, defining the private credit asset managers' business model will prove untenable and they can face solvency issues. 

Is SpaceX Actually A Space Natural Resources Mining Investment Play?

 

SpaceX is touted by Wall Street investors, equity research analysts and Silicon Valley investors and technologists as satellites in space, internet beamed by satellites, space rockets launch infrastructure and artificial intelligence, AI chat bot investment opportunity.

With the future growth forecast by Wall Street equity research analysts to come roughly 70 % from AI chat bots and 30 % from satellites launching in space and the associated internet.

Actually, SpaceX could be a space mining for base metals, precious metals and rare earths and other resources investment operation. There are many proofs and observations that asteroids from space contain huge, possibly hundreds of trillions of USDs or even more potential for base metals, precious metals and rare earths and other resources extraction. Other planets according to various studies and observations most certainly huge, possibly hundreds of trillions of deposits of base metals, precious metals and rare earths and other resource.

So SpaceX could actually be a way to put mining infrastructure in space on asteroids, the Moon, Mars, Jupiter mainly and other planets which could be used to mine the possibly hundreds of trillions of USDs or even more potential for base metals, precious metals and rare earths contained there in.

SpaceX now provides the rockets which could potentially get people on asteroids, the Moon, Mars, Jupiter mainly and other planets, also the satellites which could provide the infrastructure there, also the internet.

So, basically SpaceX could be an investment to build a base on asteroids, the Moon, Mars, Jupiter mainly and other planets to mine the base metals, precious metals and rare earths and other resources deposits which some estimate to be hundreds of trillions of USDs or more.

The Grok AI could also prove useful chat bot to mine the base metals, precious metals and rare earths and other resources deposits in Space.

However, first SpaceX has to achieve overall profitability to finance the mining of the base metals, precious metals and rare earths and other resources deposits in space on the Moon, Mars, Jupiter mainly and other planets. Investor money only could not prove enough. And investor money could suffer a 'sudden stop' if SpaceX does not show a clear path for profitability.

Currently, SpaceX's intrinsic value is about 210 billion USDs and only if the Grok chat bot AI investments losses are significantly reduced in the very near term. That compares with SpaceX's current 1.91 trillion exorbitant market capitalization. 

To mine the possibly hundreds of trillions of deposits on asteroids, the Moon, Mars, Jupiter mainly and other planets other companies are needed to provide the ecosystem of space base equipment, rockets, infrastructure, internet, mining equipment, food, drinks, etc. 

Private Credit Hold Off Large Part Of Redemptions

 

According to various sources various private credit asset managers have held off roughly 40 % of the recent redemption requests.

Big private credit asset managers like Blackstone, BlackRock, KKR, Apollo, Carlyle TPG, Ares, Blue Owl, Parners Group, CVC, EQT are trying to weather the recent storm engulfing the sector after the bankruptcies of Tricolor, First Brands, Market Financial Solutions caused a large wave of redemption requests since late 2025

Private credit asset managers answered by gating the investments outflow.

As long as the AI boom does not turn out to be a bubble defined by the Nasdaq Composite falling by more than 45 % from its peak, private credit will be able to absorb the current difficult times.

 

What If AI Turns Out To Be A Bubble And Bursts?

 

If AI turns out to be a bubble and busts there are two possible scenarios:

1) Mild realistic scenario:

The Nasdaq Composite falls 46 % from its peak.

1) Apple's market capitalization falls to 1.7 trillion USDs from 4.53 trillion USDs currently.  

2) Microsoft's market capitalization falls to 1.4 trillion USDs from 2.90 trillion USDs currently

3) Alphabet's market capitalization falls to 2.0 trillion USDs from 4.36 trillion USDs currently.

4) Amazon's market capitalization falls to 1.5 trillion USDs from 2.61 trillion USDs currently

5)  Meta's market capitalization falls 800 billion USDs from 1.48 trillion USDs

6) Tesla's market capitalization falls to 0.5 trillion USDs from 1.23 trillion USDs currently

7) NVIDIA's market capitalization falls to 2.3 trillion USDs from 4.71 trillion USDs currently 

 

1) Pessimistic scenario scenario:

The Nasdaq Composite falls 62 % or more from its peak.

1) Apple's market capitalization falls to 800 billion USDs from 4.53 trillion USDs currently.  

2) Microsoft's market capitalization falls to 600 billion USDs from 2.90 trillion USDs currently

3) Alphabet's market capitalization falls to 700 billion USDs from 4.36 trillion USDs currently.

4) Amazon's market capitalization falls to 600 billion USDs from 2.61 trillion USDs currently

5) Meta's market capitalization falls 400 billion USDs from 1.48 trillion USDs

6) Tesla's market capitalization falls to 120 billion USDs from 1.23 trillion USDs currently

7) NVIDIA's market capitalization falls to 420 billion USDs from 4.71 trillion USDs currently 

 

Actually in a worst case scenario the Nasdaq Composite could fall 82 % or more as in the Dot Com boom and bust.

In such a worst case the Magnificent 7 stocks Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and NVIDIA's market capitalization could fall 80 % or more from their current levels.

 

Will The Coming IPO Boom Be A Precursor To An AI Bust? SpaceA, OpenAI, Anthropic

OpenAI, Anthropic, SpaceX along with spades of other technology companies and companies from other sectors are about to stage an IPO in 2026, according to various media reports. SpaceX already did its IPO.

OpenAI raised 122 billion USDl currently at a post money 852 billion USDs valuation, Anthropic raised 65 billion USD at 965 billion USDs post money valuation and SpaceX staged an IPO on Thursday last week and is currently valued at 2.43 trillion USDs, 15 % above its IPO price.

OpenAI, Anthropic, SpaceX's AI business are currently heavy loss making. SpaceX' AI business recorded a net loss of (6.36) billion USDs.

If OpenAI, Anthropic which loose billions of USDs per year complete a successful IPO and other companies from other sectors that are also loss making complete also IPOs successfully, this could signal that we are in an artificial intelligence, AI bubble, which inflates assets across the global economy.

At the peak of the internet Dot Com bubble and subsequent bust, companies, which either had no revenue or were heavy loss making were staging IPOs and that signaled the peak of the internet Dot Com bubble.

Now, many analysts and investors say companies like OpenAI, Anthropic, SpaceX and even the magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and NVIDIA have revenue and that could substantiate their high for the magnificent 7 valuations and exorbitant for OpenAI, Anthropic, SpaceX valuations. If the AI boom does not turn into a bust.

The coming sky high IPO valuations of  OpenAI, Anthropic and SpaceX's IPO already priced and with market capitalization of 2.43 trillion USDs along with spades of other technology companies could well signal the top of the current artificial intelligence, AI boom which could be followed by a bust, defined by the Nasdaq Composite falling more than 62 % from its recent stock market high.

 

SpaceX Valuation. On The Eve Of The IPO

SpaceX is now valued by public markets at 2.1 trillion USD.

There are three possible scenarios for Tesla's value in the future:

1) Current scenario based on the three most recent yearly financial reports of SpaceX: 

SpaceX is worth 210 billion USDs. This is only true if Tesla spins off or sells out of its loss making AI business and is left only with its Connectivity business which produced net income of 4.423 billion USD in the calendar 2025. SpaceX's space business had a net loss of (657) million USDs in 2025.

SpaceX's reported a loss of (4.276) billion USDs for the 1st Quarter of 2026 and a loss of (4.937) billion USD for the calendar 2026. 

2) Mild profitability scenario. 

SpaceX's AI business lives only partially to the extremely positive scenarios of some Wall Street equity research investors and analysts and SpaceX's AI business starts making 5 billion USDs in net profit on 18 billion USDs yearly revenue in 2030. SpaceX's overall revenue and profit reach 42 billion and 10 billion USDs in 2030 and grow by 5 % a year from there on for the next 10 years.

In such a scenario, SpaceX could be worth 1.1 trillion USDs

3) Huge success 'current' scenario.

SpaceX lives up to the some of the most optimistic current Wall Street equity research investors and analysts' estimates. 

For example SpaceX's AI business is a huge success and reaches 87 billion USDs in revenue and 15 billion USDs in net profit in the calendar 2040. SpaceX's connectivity business clocks in 40 billion USDs of revenue and 8 billion USDs of profit in 2040 and SpaceX's space business also starts making around 15 billion USDs in revenue and 3 billion USDs in profit by 2040.

In such a case SpaceX's value could reach 2.8 trillion USDs. 

  

Tesla Valuation. June 2026. On The Eve Of SpaceX IPO

 

Tesla's intrinsic value is 120 billion USD. This is the value of the electric vehicle technology, itself, which is pending on Tesla finding a way to produce electric vehicles profitably, without subsidies. Electric vehicles like Tesla's use large quantity of ferrous metals, which make producing electric cars unprofitable.

Since Tesla is getting somewhere around 7 500 USD subsidy per Tesla electric vehicle, Tesla is inherently unprofitable. In reality. An unprofitable business is worth 0.

So, in reality there are three scenarios for Tesla's worth:

1)  Tesla finds a path to minor profitability after subsidies via a technological breakthrough. In this case Tesla is worth 120 billion USD.

2) Tesla does not become profitable after subsidies. In this case Tesla is worth 0, zero.

3) Tesla develops a new profitable business like robotic taxis, which could make money for the company. The size of such a business could be worth between 100 billion USDs to 1 trillion USDs, depending on Tesla's market share.

Partners Group Limits Withdrawals From A Private Equity Fund. Implications For Private Equity And Private Credit

 

Partners Group, the Swiss based alternative assets manager capped withdrawals from one of its private equity funds.

The recent wave of withdrawals limits affected mainly private credit funds. Cliffwater, BlackRock, Blue Owl, Ares, etc. all set limits on withdrawals from private credit funds they manage in the months since the beginning of 2026.

Partners Group's shares slid 16 % on the day the company announced it limits withdrawals from its private equity fund and this triggered a wave of selling of leading listed private equity giants like Blackstone, KKR, EQT, CVC, Bridgepoint Group, TPG, Ares etc., because they are fears the recent private credit rout could affect the private equity funds.

As long as the AI boom does not turn into bust defined by the Nasdaq Composite falling more than 62 %, the private equity giants Blackstone, KKR, Carlyle, Apollo EQT, CVC, Bridgepoint Group, TPG, Ares, Blue Owl etc. and mid sized and small private equity managers and the private equity industry should turn out OK and it would be able to weather the current troubles.

NVIDIA Valuation Scenarios

 

NVIDIA's market capitalization is currently 5.2 trillion USDs

There are several scenarios possible:

 1) The AI boom which NVIDIA leads really is the fourth industrial revolution and changes the world more than even the internet boom. The Nasdaq Composite could double from current levels in such a case, In such a case NVIDIA's market capitalization could reach 9.3 trillion USDs

2)  The AI rally lives up to half the current hype. The Nasdaq Composite falls by 30 % from current levels. NVIDIA's market capitalization could fall to 2.1 trillion USDs in such a case

3) The AI boom turns into a bust defined by the Nasdaq Composite falling more than 65 % from current levels. NVIDIA's market capitalization could fall to 810 billion USDs in such a case

 

The Embedded Leverage In Private Credit

 

The leading private credit firms Blackstone, Blackrock, KKR, Carlyle, Apollo, Ares, Blue Owl, TPG, Partners Group, EQT, CVC etc. disburse loans often 7 % to 15 % interest rates to clients, many of which a mid sized technology firms.

Many of these firms are considered risky and unbankable by money center banks as JPMorgan, Bank of America, Wells Fargo, Citi, Goldman Sachs, Morgan Stanley, etc. 

The high interest rates of private credit create operational leverage, whereby if the firm that receives the loan, develops very well, grows revenue fast and reaches profitability the private credit loan enhances the profitability and growth of the company. Contrary, if the firm goes into trouble, stops growing revenue and becomes loss making the high interest rates of 7 % to 15 % on the private credit loan stifle the firm even further, a sort of negative compounding.

So private credit is a natural amplifier.

The private credit industry manages 2.5 trillion USDs.

Barring a technology, AI lead bust the private credit industry should weather the current storm of First Brands, Tricolor, MFS and the redemption wave.

Private Credit's Main Client Is AI

 

The largest parts of the private credit industry's 2.5 trillion USDs assets under management are intertwined with the artificial intelligence, AI boom.

Wall Street equity research analysts estimate that 25 % to 35 % of the private credit industry's 2.5 trillion USDs assets under management are exposed to the risk of AI disruption.

Other sources say 20 % of the private credit industry's loans are directly tied to software.

So if the current fourth industrial revolution or the AI boom pops and the Nasdaq Composite plummets by 62 % or more, Blackstone, BlackRock, TPG, Carlyle, Apollo, KKR, Ares, Blue Owl, EQT, Partners Group, CVC etc. leading private credit asset managers and mid-sized  private credit asset managers could incur losses in their assets under management of 250 billion USD in mild losses scenario, 350 billion USDs in middle sized losses scenario, 500 billion USDs in worst case scenario and 1.2 trillion USDs in a catastrophic scenario, according to Wolfteam Ltd.'s projections and estimates.

Even the worst case should be absorbed by the global economy without a Great Recession 2008-2009 style economic loss. 

As long as the banking sector is not horrendously hurt by a credit crisis. 

The probability of which is 16 % currently. 

Will The Current Private Credit Difficulties Crash The Global Economy?

 

 Most probably not.

The private credit industry's assets under management are around 2.5 trillion USD, most probably not big enough to bring down the banking sector which participated with loans along the private credit disbursed by Blackstone, Blackrock, KKR, TPG, Apollo, Carlyle, Ares, Blue Owl, EQT, Partners Group etc.

However, if the AI boom turns into a bust, in a worst case scenario around 1.2 trillion USDs of the private credit industry's assets under management could be wiped out, according to Wolfteam Ltd.'s projections and estimates. There is no data how much banks have lent along into private credit financed deals.

Such a shock could possibly rattle the global banking sector. And if to that is added the losses on regular bank loans to the technology sector, AI and software especially, a new credit crisis could unfold.

Bur these are too many interconnected events to simultaneously unfold for the time being.

AI continues its fourth industrial revolution, barring a bust followed by wide scale defaults.

Alphabet Raised 60 Billion USD In Bonds In Four Months. Are Hyperscalers Getting Overextended?

 

Alphabet, the owner of the Google search engine is about to raise 60 billion USDs in bonds in the last four months. It raised the money not only in USD, but also in British pounds, Canadian dollars Swiss francs and Japanese yen.

Other hyperscalers like Meta, owner of Facebook have borrowed intensively to finance the huge capital expenditures in artificial intelligence, AI.

Amazon, Alphabet, Meta and Microsoft plan, taken together to invest in AI and cloud infrastructure, i.e. AI data centers and energy to power these data centers 750 billion USDs in 2026 alone according to their latest quarterly reports!

Much of the money will be borrowed.

No one from Amazon, Alphabet, Meta and Microsoft apparently wants to miss on the artificial intelligence, AI data center wave. Fear Of Missing Out, FOMO is rife in Silicon Valley. Apparently according to most of the leading technologists and technology investors it will be one winner to rule them all. Or at most 2.

The artificial intelligence, AI fourth industrial revolution will have many winners in hardware, software, energy infrastructure, according to Wolfteam Ltd.'s projections and estimates.

Amazon, Alphabet, Meta and Microsoft have fortress balance sheets with tens of billions of USDs of cash on them in each case.

However, the planned 750 billion USDs in investment is a huge sum of money and Amazon, Alphabet, Meta and Microsoft could easily run into hundreds of billions of USDs of debt which could threaten their operational excellence, namely to produce huge multi billions of USD of revenue and profit.

In end effect over-extension of AI investment could threaten the existence of Amazon, Alphabet, Meta and Microsoft if artificial intelligence, AI does not produce the envisaged benefits in productivity. A large increase in expected productivity could bring huge increases in revenue and profit for Amazon, Alphabet, Meta and Microsoft.

But this is only a rosy, positive assumption, expectation. If it does not come true or even comes true partially the very existence of Amazon, Alphabet, Meta and Microsoft could be threatened if they go on to burrow hundreds of billions of USDs.

One should bear in mind the non negligible probability of recession caused by let's say high oil prices, a new geopolitical conflict, a pandemic, banks bringing onto their balance sheets trillions of USDs of off balance liabilities, limit of chip technology production, sharp drop in technological productivity, etc.

All these events, if they cause a deep global recession will decrease by tens of percentages the revenues and profits of Amazon, Alphabet, Meta and Microsoft or even drive them in net losses, which could threaten Amazon, Alphabet, Meta and Microsoft's very existence.

But for nor, the positive and full of optimism artificial intelligence, AI train is going in full speed ahead. 

KKR Refunds 350 Million USD In Carried Interest

KKR, The New York-based alternative asset manager said it would refund $350 million in previously paid-out carried interest to investors in its second private equity fund in Asia.

This is the latest in a string of setbacks for the private equity and private credit industry.

The Tricolor, First Brands and Market Financial Services(MFS) bankruptcies have already caused a stir for the private credit industry.

Still, the private credit sector at 2 trillion USDs of assets under management seems big enough to absorb these shocks.

If the Federal Reserve does not raise interest rates abruptly and there is no AI technology bust, the private credit sector should weather the storm in 2 to 3 years.

Will Private Equity, Private Credit Recover Fast From The Recent Turmoil?

 

First Brands, Tricolor, Market Financial Services' sudden bankruptcies triggered a small run on leading private credit firms especially and private credit asset managers also like Blue Owl, Ares, BlackRock, Blackstone, Apollo etc.

Since there have been no other high profile bankruptcies of companies which took out high yield loans, it seems the private equity and private credit industry will recover from the shock in a year or so.

Provided that the AI boom does not turn to a bust or there is no other geopolitical or macroeconomic shock.

The recent redemptions from private credit funds staved off and the first quarter results of private equity and private credit firms were good. 

So private equity and private credit asset managers are on a recovery trajectory. 

Ares First Quarter 2026 Results

 

Ares Management Corp  wrote the following in its First Quarter 2026 Earnings Press Release:

 'GAAP net income attributable to Ares Management Corporation was $142.6 million for the quarter ended March 31, 2026. On a basic and diluted basis, net income attributable to Ares Management Corporation per share of Class A and non-voting common stock was $0.46 for the quarter ended March 31, 2026.

After-tax realized income was $452.4 million for the quarter ended March 31, 2026. After-tax realized income per share of Class A common stock was $1.24 for the quarter ended March 31, 2026. Fee related earnings were $464.4 million for the quarter ended March 31, 2026.'

Ares Management's stock price is down circa 40 % from its recent peak driven by the turmoil in the private credit business, namely the bankruptcies of Tricolor, First Brands Group and Market Financial Solutions.

Since private credit usually gives out credits with between 7 % and 15 %, even 20 % interest rates many a times to finance mid cap technology firms private equity buyouts, bankruptcies as Tricolor, First Brands Group and Market Financial Solutions are to be expected. This can not be called normal line of business, but given the inherent leveraged nature of private credit, especially when the private credit loans written are used to finance private equity buyouts, there are bound to be bankruptcies.

Circa 30 % or even more according to some analysts of the private credit loans are disbursed to technology, even artificial intelligence, AI related firms. Some of them loosely related as healthcare AI and energy related AI infrastructure.

If the AI boom does not turn into a bust defined by the Nasdaq Composite falling more than 62 % of its recent peak, private credit loans flows and private credit giants as Ares, Carlyle, Apollo, Blue Owl etc.'s stock prices should start to recover. 

A key risk to the AI trade are the coming high profile IPOs of ChatGPT, Anthropic and the combined SpaceX and xAI entity. It they are successful, there is the risk they will sap large scale capital from other AI technology firms. Both that or if the coming AI IPOs flop, could cause a large correction in the Nasdaq Composite and by extension the S&p 500, Dow Jones Industrial Average and most probably global stock markets.

 

The Current Geopolitics Could Lead To A Mining And Emerging Markets Boom. After The Current AI, Private Credit Boom

 

The current geopolitical tensions could lead to a boom for mining companies and emerging markets.

Between 2003-2008 there was an emerging markets and energy companies market capitalization boom, which followed the 1999-2001 dot com boom and bust.

Currently, a similar situation could develop.

We have now a technology artificial intelligence, AI driven boom carried to a large extent to money flows to the lightly regulated private credit markets. The current circa 2 trillion USD of assets under management private credit industry size lead inflows in AI technology companies. 

The recent TriColor, First Brands, Market Financial Services, MFS large profile bankruptices and funds like Blue Owl, Apollo holding private credit redemption could signal a slowdown of the AI boom or even an AI bust

Funds could easily flow into emerging markets and energy and mining companies, especially.

The private credit 2 trillion USDs of assets under management go to a large extent to finance high yield loans for private equity buyouts.

If there is a sudden stop to the private equity and private credit funds financing mainly mid sized technology deals, the artificial intelligence AI boom could slow down significantly.

And if the AI boom turns into a bust, caused either by the Federal Reserve raising rates or money suddenly stopping flowing into private equity and private credit, defined by the Nasdaq Composite falling more than 62 % from its recent peak, the next boom where the money flows is emerging markets and energy, resources, commodities mining company, according to Wolfteam Ltd.'s projections and estimates.

Ares Limits Private Credit Fund Withdrawals After Large Scale Redemption Requests. An Analysis

 

Ares limited withdrawals to 5 % from its $22.7 billion Ares Strategic Income Fund (ASIF) after investors sought to withdraw as much as 11.6 % of the fund's Net Asset Value.

Ares' Strategic Income Fund (ASIF) redemptions cap, after also Apollo also capped redemptions from its $25 billion private credit fund, Apollo Debt Solutions is another sign of the stress the nearly 2.0 trillion + USD in assets private credit industry is going through.

Ares' 22.7 billion USDs and Apollo's 25 billion USDs are huge funds.

Investors sought to pull roughly 22% of shares from Blue Owl Credit Income Corp., its flagship $36 billion private-credit fund.

These are huge multi billion USDs redemptions requests.

If the private credit industry does not honor them, be it staggered through time, the private credit industry will have a huge credibility issue, which could turn into a solvency problem in time.

Furthermore, if the current AI technology boom turns into a bust, defined by the Nasdaq Composite falling more than 62 % from its recent peak, the private equity and private credit industry will face bankruptcy possibility issues, because then clients may start puling out money from private equity and private credit funds en masse.

 

Apollo Limits Redemptions Of Its Flagship Private Credit Fund

 

 

Apollo announced it limits redemption from its 15.1 billion USD net asset value flagship private credit fund Apollo Debt Solutions BDC sticking to a predetermined 5 % cap.

The fund received redemptions requests equal to 11.2 % of shares of the fund.

Apollo has made the claims it has lent to larger, stronger companies, but the news it is limiting redemptions from its flagship private credit fund show it is not insular to the AI driven Software As A Service SaaS technology companies business models reappraisal that is plaguing the technology sector. 

Software is 12.3 % of the assets of Apollo Debt Solutions BDC.

The news that Apollo is having difficulties paying out request from its flagship credit fund confirms that the private credit industry is going through very tough times as both stretched software valuations and AI disruptions chips away at the previously winning model of Software As A Service SaaS for technology companies.

The private equity and private credit industry should recover from the current setback.

Artificial intelligence, AI is not going to disrupt software development as much as currently feared, according to Wolfteam Ltd.'s projections and estimates. 

If the AI boom does not turn to a bust, defined by the Nasdaq Composite falling more than 62 % from its recent peak, the private equity and private credit industry should turn out OK, with limited defaults.

 

 

 

Private Credit And The Coming Inflation

 

If inflation goes up due to the current geopolitics, the Federal Reserve will most likely raise rates.

Other global central banks like the European Central Bank will follow.

The higher interest rates will hit the lending portfolios of the leading private equity and private credit asset managers Blackstone, KKR, BlackRock, Carlyle, Apollo, Ares, Blue Owl, EQT, Partners Group etc. by driving down the AI technology companies' valuations and hampering their ability to service the high interest rate private credit loans. Leveraged buyouts of technology companies will suffer as the AI companies will face difficulties servicing their debt.

The private equity, private credit industry will weather the shock if the current AI boom does not turn into a bust defined by a fall in the Nasdaq Composite of 62 % or more. If the inflation shock causes a global economic crisis, the Nasdaq Composite can fall more than 62 % and the private credit industry will face solvency problems, according to Wolfteam Ltd.'s projections and estimates.

Otherwise, the current inflation shock will be absorbed via large, multi billion private credit loans write offs. 

BlackRock's Private Credit Business. BlackRock Writess Off a 25 Million USD Private Credit Loan To 0

BlackRock is the world leader with great distance of the fast growing index investing funds. Due mainly to index funds' investments BlackRock is the world's largest asset management company in terms of assets.

But the asset management industry's profits in the last 5-7 years are concentrated in alternative asset management, namely private credit.

BlackRock is still building out actively its private credit business and BlackRock's private credit business is most likely in the top 10.

Due to BlackRock's aggressive build out of its private credit business there are problems also.

Two weeks ago BlackRock wrote of the value of a private credit loan to 0, from 100 % value of the loan filed in its third quarter 2025 filing. Most likely this is due to both heavy AI, technology investment and fast private credit growth by BlackRock.

Most probably more private credit loans from BlackRock and the entire private credit industry will be written off due to aggressive lending growth by private credit asset managers.

If the current geopolitical inflation shock causes leading central banks to raise rates aggressively, this will send tremors in the private credit markets which is basically a leveraged trade on interest rates. If global developed markets interest rates level rise by 1 % to 2 %, the private credit will most likely write down tens of billions USDs if not hundreds of billions of USD's from the current 3.5 trillion private credit assets under management globally.

However, if there is no  high scale financial crisis the private credit industry will weather such a shock without large, widespread insolvencies of both the leading large and mid cap and small private credit asset managers.

 

Private Equity And AI

 

First Brands, Tricolor and Market Financial Solutions are what one can call normal rate of failures in the high risk loan portfolio, with lending interest rates of 7 % to 15 % on average that the largest private equity and private credit firms hold. Those failures and the halting of redemptions from Blue Owl's OBDC II fund after paying out circa 600 million USDs to investos are the main reasons the largest private credit asset managers lost more than 40 % of their market capitalization from the recent peaks.

No solvency problems for the private equity, private credit industry up till now, though.

Some Wall Street analysts estimate that the exposure to predominantly mid sized technology firms and also to artificial intelligence, AI data centers forms about 20 % of the portfolio exposure of the largest private credit, private credit firms. The indirect technology exposure could even reach 30 % other largest private equity, private credit firms' portfolio.

In short, if the AI boom turns into bust, private equity and private credit firms' exposure to the sector could cause solvency problems for the private equity industry. 

Yes, the private equity, private capital industry does not need much capital, but it still needs to pay salaries and bonuses and support large real estate offices and computers, etc. 

Private Credit And The Current Oil Shock

 

According to some analysts and investors around 30 % of the capital raised in the last 7 years by the leading large and mid cap private equity, private credit, real estate and infrastructure asset managers has gone into artificial intelligence, AI, technology and altogether software companies.

AI and software related investments make up around 20 % of the total portfolio of the Blackstone, KKR, BlackRock, TPG, Apollo, Carlyle, Ares, Blue Owl, CVC, EQT, Partners Group etc. leading private equity and private credit asset managers, according to research analysts, investors and media.

The world is experiencing an oil shock as the price of oil went up more than 60 % from three weeks ago.

The current shock oil price rise will most likely cause a global economy inflation shock. The rising prices will most likely force the Federal Reserve to withhold from raising the Federal Funds Rate in 2026. The probabilities of the Federal Reserve raising rates in 2026 fell by a lot after the Federal Reserve meeting last Wednesday.

Such a development would put a downward pressure on the valuations of AI, technology and software companies in the leading private equity, private credit firms portfolios.

And the fall in portfolio values of the leading private equity firms will be even more exacerbated if the probable inflation shock caused the Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and other leading central banks to start hiking rates in the near future.

The probable negative effect of rising interest rates should be temporary and not catastrophic due to artificial intelligence, AI's innovation potential and the huge positive cash flows generated not only by the hyperscalers Amazon, Microsoft, Alphabet and Meta, but also by many mid cap and smaller AI firms. 

The Current Private Credit Stock Market Fall And Turmoil

 

The current turmoil in private credit his hurting the stock prices of the leading private equity, private credit, real estate and infrastructure asset managers Blackstone, BlackRock, KKR, Apollo, Carlyle, TPG, Ares, Blue Owl, EQT, CVC, Partners Group etc. by causing them to fall circa 35 % or more from their recent peak.

The main issue is that  private equity, private credit, real estate and infrastructure has suffered a bifurcation and most of the recently raised capital in the last 5-7 years has gone in artificial intelligence, AI related projects like AI data centers build out financed with raised means for private credit and real estate loans leveraged even more with bank loans or private equity buyouts of small and medium sized software, AI, technology companies financed with high yield debt, bank loans and even private credit loans.

So the whole private equity, private credit, real estate and infrastructure industry at the moment gathers momentum as one giant artificial intelligence, AI trade, leveraged to the bring with bank loans, exposing also both the money center and regional banks to the AI trade, directly.

AI, however is threatening to disrupt the software sector by replacing IT programmers.

Such concerns are overblown, according to Wolfteam Ltd.'s projections and estimates.

If the artificial intelligence, AI boom continues or suffers a small setback defined by the Nasdaq Composite falling up to 20 % from its peak, the private equity and private credit industry will suffer losses, but their immediate future will not be threatened.

If the artificial intelligence, AI boom turns into bust, however defined by the Nasdaq Composite falling more than 40 % from its recent all time high, the leading private equity, private credit, real estate and infrastructure asset managers Blackstone, BlackRock, KKR, Apollo, Carlyle, TPG, Ares, Blue Owl, EQT, CVC, Partners Group etc. and many small and mid cap private equity, private credit asset managers could face huge difficulties, potentially turning into existential threats, according to Wolfteam Ltd.'s projections and estimates 

BlackRock And Private Credit

BlackRock Inc, apart from being the leading global asset manager of public equities, has high aspirations in private credit.

In 2024 20 billion USDs of BlackRock's revenue came from the Private Markets and Technology segment of BlackRock's financial results or about 15 % of 2024 revenue. BlackRock aims to lift the Private Markets and Technology percentage of revenue to 30 % of revenue or 35 billion USDs by 2030.

BlackRock targets a 400 billion USD to fund raise in the 2025-2030 period. 

All of the above compares with the 1.23 trillion USDs Blackstone manages and in 2025 Blackstone made 3.02 billion USD in profit on 14.21 billion USDs in revenue.

Blackrock is regarded as the world largest alternative asset manager.

BlackRock could soon surpass Blackstone.

Last week BlackRock limited withdrawals on an HPS private credit fund.

This was the latest blow for the private credit industry.

The private credit industry should be able to survive the asset withdrawal wave, provided that the AI boom goes as private credit asset managers have about 20 % of their assets exposure to artificial intelligence, AI technology companies.

If, however, AI turns out to be a bubble and bursts, defined by the S&P 500 and Nasdaq Composite falling more than 35 % and 45 % from their recent peaks many large, medium and small private equity, private credit asset managers could battle insolvency. 

Cliffwater Limits Private Credit Withdrawals. Effect On Private Credit

 

Cliffwater limits redemptions from its Cliffwater Corporate Lending Fund.

This is the latest from a serious of troubles facing the private credit and private equity asset management business.

Investors are worrying that alternative asset managers have financed private equity leveraged buyouts of overvalued technology companies and have given out private credit loans to over leveraged mid sized AI technology firms.

On top of that artificial intelligence, AI could disrupt many software businesses.

If the AI boom does not turn out to a bust, the private equity and private credit industry should turn out OK.

If there is a AI bubble burst, similar to the Dot Com bust, the private equity and private credit industry will face serious difficulties. 

 

Morgan Stanley Limits Withdrawals From A Private Credit Fund. The Effect On Private Credit

 

Morgan Stanley limited last week withdrawals from one of its private credit funds, by allowing only 45.8 % of tender requests to be fulfilled.

Morgan Stanley said it would fulfill 5 % equivalent of assets tender requests as of December 31, 2025.

After First Brands, Tricolor, Blue Owl holding redemptions from its OBDC II fund and later selling off 1.4 billion USDs of assets to pension funds and insurance companies to finance withdrawals, BlackRock writing off a loan to 100 %, which only three months before was carried at 100 % on the book, Morgan Stanley holding withdrawals from one of its funds is the latest troublesome sign for the private credit and by extension the largest private equity asset managers Blackstone, KKR, BlackRock, Apolli, Carlyle, Ares, Blue Owl, TPG, EQT, Partners Group etc, and the whole mid cap and small cap private equity business.

Blackstone, KKR, BlackRock, Apolli, Carlyle, Ares, Blue Owl, TPG, EQT, Partners Group etc have lent a large part of their recently, in the last 5-7 years raised assets to artificial intelligence, AI technology and software firms. AI, mainly mid sized, according to some investors is disrupting many software business.

As long as the current artificial intelligence, AI boom does not turn into bust where by the Nasdaq Composite falls by more than 32 % from its recent all time high,   Blackstone, KKR, BlackRock, Apollo, Carlyle, Ares, Blue Owl, TPG, EQT, Partners Group etc, and the whole mid cap and small cap private equity business firms should not face solvency issues, according to Wolfteam Ltd.'s projections and estimates.

If the artificial intelligence, AI boom turns into bust and the Nasdaq Composite tanks from 30 % to 62 % from its recent high,  Blackstone, KKR, BlackRock, Apolli, Carlyle, Ares, Blue Owl, TPG, EQT, Partners Group etc, and the whole mid cap and small cap private equity business will face huge, possibly existential difficulties. 

MFS Market Financial Solutions And Private Credit

MFS, Market Financial Solutions the UK bridging mortgage loans provider suddenly collapsed last month saddling private credit funds that had lent to it with more than 1 billion USDs in losses.

MFS creditors claim a 1.8 billion USDs shortfall in the assets of MFS, the collapsed UK mortgage lender.

After First Brands, Tricolor, MFS is the latest insolvency to hit the private equity, private credit, infrastructure, real estate asset management industry.

Last week BlackRock wrote off a private credit loan to 0 %, which just three months ago was carried at 100 % on BlackRock's books.

 As long as the AI boom continues, the private credit industry is safe, according to Wolfteam Ltd.'s projections and estimates.

If the AI boom turns into bust, however, whereby the Nasdaq Composite falls 62 % from its most recent peak, the private credit could face solvency issues. 

If the Nasdaq Composite falls 32 % from its most recent peak, the private credit will also face enormous difficulties. 

BlackRock's Private Credit Exposure

BlackRock in the previous week wrote down the value of a private credit loan to Amazon aggregator to 0 % from 100 % just three months ago.

For now Blackrock's exposure private credit exposure looks manageable.

As long as there is no bursting of an AI bubble, defined by the Nasdaq Compoasite falling more than 35 % from its most recent high.

Then all the leading private credit, private equity players Blackstone, BlackRock, KKR, Apollo, Carlyle, Ares, Blue Owl, TPG, CVC, EQT, Partners Group and all the mid sized private equity firms will face difficulties. 

BlackRock Writes Down A Second Loan To Zero

BlackRock wrote down a second loan to zero in the space of 8 months.

And it took for the latest write down to 0 only 3 months after the loan was carried at 100 % on the books. 

The problems in the private credit sector seem to be piling up after the Tricolor, First Brands and Market Financial Solutions(MFS) collapsing.

All three, including the lender Market Financial Solutions drew fraud and improprieties accusations.

On top of that, Blue Owl first tried to merge a hundreds of millions of USDs of private credit loans OBDC II fund into another, then held off redemptions in it and recently sold off 1.4 billion USDs of assets to finance redemptions. 

According to analysts the software sector accounts for around 20 % of private credit loans.

In short, as long as the artificial intelligence, AI boom does not turn to a bust and the Nasdaq corrects by more than 30 %, if not more than 62 %, the private equity, private credit, real estate and infrastructure asset management leaders Blackstone, BlackRock, KKR, Apollo, Carlyle, TPG, CVC, EQT,  Partners Group and the rest of the private equity, private credit sector should recover, according to Wolfteam Ltd.'s projections and estimates.