Software Sell-Off: Framing Concerns About Private Credit

01 APRIL 2026

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The software sector has undergone a dramatic reset—erasing nearly $2 trillion in public equity value—as investors grapple with the long-term implications of generative AI. But is this a true disruption story, or a misreading of where value will ultimately accrue?

This paper dissects the four core elements behind the AI software disruption thesis, while offering insights into AI-specific safeguards that underwriters can apply to mitigate risk. While certain AI disruption risks are valid in a narrow context, many are overstated, in our view, particularly for mission-critical, enterprise-grade software systems where durability, compliance, proprietary data and integration depth remain paramount.

Rather than signaling decline, AI may act as a net-positive tailwind for wellpositioned software incumbents—expanding the total addressable market (TAM), enhancing product stickiness, and unlocking new pathways to monetization. Meanwhile, outside of sentiment driven indicators, credit and equity fundamentals have emerged from the latest quarter on a solid footing.

Agentic AI can be a TAM Expander for Software

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