Tech sector sees divergence between credit risks and software growth

The technology sector is experiencing divergent trends regarding artificial intelligence. In the credit markets, Robert Cohen of DoubleLine has warned of a potential AI-related credit bubble due to massive debt issuance. Hyperscalers have issued over $155 billion in unsecured bonds in 2026, a 45% increase from the previous year, as companies fund massive AI capital expenditures. However, Cohen suggests that high-quality issuers like Alphabet and Amazon offer value, as their investment-grade bonds have been undervalued alongside more speculative debt.

Simultaneously, the software sector is seeing a significant recovery following a period of intense selling known as the ‘SaaSpocalypse’. While investors previously feared AI would replace software businesses, recent earnings suggest AI is actually driving growth. Companies such as Snowflake have reported substantial revenue increases, and Salesforce has raised guidance due to demand for agentic AI solutions, leading to significant share price surges.