Bond Bulletin: AI disruption and the software sector

The AI boom has led many investors to focus not only on the companies that are going to be the winners of the technological revolution, but also the losers. In this Bond Bulletin, we assess the recent software sell-off and what it means for public and private markets.

Implications for Fixed Income Investors

The software sector sell-off has highlighted the fact that markets are not only concerned about the AI bubble bursting, but also the disruption risk and potential for a significant re-rating of specific sectors. Public credit markets remain relatively insulated compared to BDCs, which have more concentrated software exposures. The current environment rewards bottom-up analysis and security selection, as not all software companies will be equally affected. As such, active management will be essential to capture value and manage downside risk as the AI boom continues to reshape markets.

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.

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