Goldman Sachs’ investment management division is telling investors it’s weathering the storm better than competitors in the private credit sector, where concerns about artificial intelligence disrupting technology companies have created market turbulence.
According to an investor communication obtained by Reuters this Friday, the financial giant reported that Goldman Sachs Private Credit Corp maintained robust investor demand through December, with money flowing in at rates 11% higher than the yearly average. The firm’s fourth-quarter redemption rate stood at 3.5%, significantly better than the industry average exceeding 5%.
The private credit industry, which serves as a major funding source for technology firms, is experiencing upheaval as investors worry that artificial intelligence could diminish software companies’ profitability and their capacity to repay debts. This anxiety has led investors to reconsider their exposure levels and evaluate potential risks.
Adding to market concerns are fresh complications at Blue Owl regarding asset transactions, which sparked a dramatic decline in stock prices for alternative investment managers operating in private credit markets.
These developments are challenging a segment of the alternative investment world that has expanded to approximately $2 trillion in recent years.
Goldman Sachs acknowledged the challenging environment ahead, stating: “As we enter 2026, the private credit landscape is facing volatile macroeconomic conditions, shifting flows in the traded and non-traded BDC (Business Development Company) market, and accelerating technological change – particularly around AI.”
The investment firm revealed that GS Credit held roughly 15.5% exposure to enterprise software lending by the end of the third quarter, positioning it at the lower end compared to similar companies.
Market participants have spent weeks wrestling with potential AI-related disruption, with growing numbers viewing the technology as shifting from a beneficial force for software efficiency to a possible existential challenge.
Goldman indicated it has spent years analyzing AI’s effects on the software industry and declined its first transaction due to AI-related concerns back in October 2023.
The firm expressed agreement “with the perspective that AI is significantly lowering development costs which will lead to increased competitive intensity for incumbent software companies,” according to the investor letter.
Goldman emphasized its focus on investing in companies with “structural advantages and incumbency moats” that would be challenging for newcomers to overcome.
The company revealed it implemented its initial internal system for assessing AI disruption risks in early 2025, adding: “We do not underestimate the risk of AI disruption.”
