From the FT: OpenAI investors question $852bn valuation as strategy shifts
OpenAI’s $852bn valuation is facing scrutiny as it shifts strategy toward enterprise AI, competing with Anthropic while maintaining ChatGPT’s consumer lead. Some investors worry the company is unfocused and vulnerable, especially as Anthropic’s rapid revenue growth challenges its position. The Claude-maker’s annualised revenue surged from $9bn at the end of 2025 to $30bn at the end of March, driven by demand for its coding tools. Anthropic’s business appears to have leapfrogged OpenAI, which hit $25bn in annualised revenue in February, though the companies use different accounting methods to book revenue, making direct comparison difficult. Despite raising $122bn and strong leadership confidence, OpenAI is cutting side projects and prioritizing higher-margin tools like Codex. It is also expanding infrastructure and workforce. However, strategic pivots, abandoned initiatives, and intensifying competition from Anthropic and Google raise concerns about execution and long-term valuation ahead of a potential IPO.
Is this a warning sign of a private credit crisis, or just market panic?
Blue Owl Capital, often considered a poster child for the private credit boom, closed at a record low as worries grow about the health of the $1.8tn market. The stock fell 1.4% to $8.45, slipping below its previous low from late 2022. It is now down 68% from its all-time high. Source: HolgerZ, Bloomberg
Private Credit’s Hidden Software Risk
Top private credit funds Apollo, Ares, Blackstone, and Blue Owl understate software exposure, averaging 25% vs. 19% reported. Blackstone leads at 33%, Blue Owl nearly doubles its reported share. Rising AI fears make this sector a key driver of record fund withdrawals, highlighting larger-than-expected risks. Source: Will Schryver, The Wall Street Journal, Global Markets Investor
US private credit is diverging from public markets at an alarming pace
This comes as the private credit market faces growing investor scrutiny over valuations, underwriting standards, and rising redemption requests from clients. There is also increasing concern that AI will disrupt the software companies that make up a large portion of private credit portfolios. Historically, the private credit proxy index has had a 94% correlation with high yield credit spreads. If the correlation reasserts, we could see a spike in high yield credit spreads, which could eventually spread into stocks and trigger a bear market. Credit markets tend to lead equities, and right now, they are flashing a clear warning. Source: Bloomberg, Global Markets Investor, Macrobond
Ares Restricts Withdrawals Amid Private Credit Surge
Ares Management capped withdrawals at 5% from its $10.7B private credit fund after $1.2B in redemption requests, fulfilling only ~$524M. The fund still grew due to $708M in new commitments, but liquidity stress is rising across the $2T private credit market, with $13B requested this quarter and $4.6B unmet. Concerns over loan quality, slower PE exits, and aging LBOs are driving investor caution. Despite this, Ares reports a healthy portfolio and ~$5B liquidity, highlighting opportunity for long-term holders. Source: Financial Times
This is notable news from Bloomberg given Apollo's standing in private credit:
"Apollo Global Management Inc. is curbing redemptions from one of its largest non-traded private credit funds for retail investors, becoming the latest alternative asset manager to grapple with a surge in such requests. The $25 billion business development company, Apollo Debt Solutions, capped withdrawals at 5% of outstanding shares Monday after clients sought to redeem 11.2%." Source: Mo El Erian on X, Bloomberg
Private credit exploded over the past decade
Source: The Icahnist
This is not good news for a market segment that is already challenged to separate signal from noise...
Source: Bloomberg, Mo El Erian
