Software companies are increasingly reliant on leveraged infrastructure, and the rise of AI is significantly impacting this dynamic. In Q1 2025, Business Development Company (BDC) assets reached $475 billion, with software making up 23% of Ares Capital's portfolio. Recently, shares of Blue Owl, Ares, and KKR fell over 9% as UBS estimated that 35% of BDC portfolios could face disruption from AI technologies. With AI capable of performing tasks like coding and legal research more cost-effectively than traditional software, the recurring revenue that supports many loans is endangered. For instance, Anthropic's announcement of autonomous legal agents caused LegalZoom and Thomson Reuters stocks to drop 12%. The leverage situation extends into the infrastructure sector as well. Oracle plans to raise $50 billion for cloud expansion, financing about half of it through debt. CoreWeave is borrowing 87% of a $7.5 billion expansion, while Meta’s Hyperion data center project is even more leveraged, with 91.5% of its funding coming from debt. Blackstone's BCORE has recently provided significant funding to various data center projects, and allocations for data center infrastructure in BDCs grew 33% year-over-year in Q2 2025. However, the influx of private credit—expected to reach $750 billion for AI infrastructure by 2030—is under pressure. Factors like GPU lifespan, which Google architects say is limited to 1-3 years despite a theoretical 6-year lifespan, add to the uncertainty. Oracle's credit-default swaps have tripled since September, even though the company generates $15 billion in annual cash flow. Meanwhile, AMD's first-quarter revenue guidance missed expectations by $300 million, leading to a 9% drop in stock price despite a 32% annual growth rate. Small discrepancies in performance forecasts can lead to significant stock price adjustments. Distress signals are also appearing in private debt markets; BlackRock TCP Capital Corp. reported a 19% writedown in its fund, which invests in middle-market companies, indicating that some investments have lost 81% of their fair value. As reliance on debt in software and AI increases, any shifts in market expectations could trigger more substantial financial repercussions.