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Software Sell-Off: Framing Concerns About Private Credit

Blue server hardware representing software disruption, AI infrastructure, and private credit underwriting implications.

Morgan Stanley Investment Management examines the recent AI-related sell-off in software and what it may mean for private credit investors.

The piece explores four major investor concerns: insourcing, loss of AI-related market opportunity, pricing disruption, and architectural disintermediation. It also outlines underwriting considerations for identifying more resilient software businesses, including mission-critical systems, high switching costs, proprietary data advantages, and sponsor-backed innovation capacity.

Agentic AI can be a TAM Expander for Software

Chart showing projected growth in software total addressable market from AI tailwinds, agentic AI, incumbent software providers, and new entrants.

 

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Morgan Stanley

Morgan Stanley Investment Management’s Insurance Solutions team proudly supports our insurance clients with bespoke investment solutions and a comprehensive range of strategies that align well with insurers’ investment objectives and risk tolerances. We provide risk-based capital efficient solutions across public and private market strategies, and add value through thought leadership across insurance research, portfolio management, strategic asset allocation, reporting, risk management, and rating agency/regulatory considerations.

Joel Cramer, CFA
Managing Director, Head of North American Insurance Solutions
joel.cramer@morganstanley.com
Office: 312 706 4216
Mobile: 630 222 6765
 
1585 Broadway,
New York, NY 10036

 

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