Business

Software Industry’s $100,000,000,000 Bill Comes Due As AI Spooks Investors

Darakshanehaluddin, CC0, via Wikimedia Commons

Fears that artificial intelligence could replace traditional software are showing up in the debt market.

The technology sector accounts for $54.4 billion of distressed leveraged loans, or 39 percent of the total, according to a Tuesday JPMorgan Chase & Co. report reviewed by Bloomberg. Software companies face challenges refinancing as more than $100 billion in debt comes due and artificial intelligence could disrupt their business.

JPMorgan strategists, including Nelson Jantzen, found that leveraged loans trading at or below 80 cents on the dollar, the threshold for distressed debt, now total $139.8 billion, Bloomberg reported. That figure has climbed almost 90 percent in the past year.

Roughly 141 issuers now have loans priced below that level, an increase of 35 from the year prior, the report showed. CDK Global, Qlik Technologies and Quest Software are among the software providers contributing the most to the total.

Software executives have dismissed the “SaaSpocalypse,” narrative, the idea that AI will kill software-as-a-service if companies task agents with building software tools instead of purchasing subscriptions.

“This SaaSpocalypse narrative has been such nonsense,” Salesforce CEO Marc Benioff told Jim Cramer on CNBC’s “Mad Money” in August.

Oracle Chairman Larry Ellison argued in March that these fears apply “to others, but not to us.”

“Your dot watches customer feedback for recurring requests, scopes smaller improvements and bugfixes, builds and tests them, and brings you complete PRs to review with attached videos showing the changes,” OpenAI said in its announcement of its Dots agents, which can use Codex and ChatGPT Work to build software.

JPMorgan, CDK Global, Qlik Technologies and Quest Software each did not immediately respond to the Daily Caller News Foundation’s request for comment.

CCC-rated loans, the weakest tier of junk debt, are down 1.97 percent this year, while every other junk-rated category has gained, JPMorgan found. The bank expects leveraged loan defaults to climb from a projected 2.25 percent in 2026 to 4.5 percent next year.