Why Goldman Sachs Swims Against the Private Credit Tide as AI Fears Grip Markets

While $150 billion floods out of private credit markets, Goldman Sachs is doing something unexpected: they're doubling down. As institutional investors flee amid fears that AI will obliterate entire industries, Goldman's contrarian bet reveals a fundamental shift in how Wall Street views the future of finance.

The Great Private Credit Exodus

The numbers tell a stark story. Private credit redemptions have surged 340% in the past six months, with pension funds and insurance companies leading the charge. Their logic seems sound: if AI automation threatens traditional industries, why lend to companies that might not exist in a decade?

Blackstone and Apollo have seen their flagship private credit funds shrink by $45 billion and $38 billion respectively. Investors aren't just worried about defaults—they're questioning whether entire sectors will survive the AI revolution.

But Goldman Sachs Asset Management sees opportunity where others see apocalypse. They've just launched a $5 billion private credit fund specifically targeting AI infrastructure companies, data centers, and semiconductor manufacturers.

Betting on the Builders, Not the Disrupted

Goldman's strategy is elegantly simple: instead of lending to companies that AI might replace, lend to companies that AI needs to exist. Their new portfolio reads like a who's who of the AI supply chain—cloud infrastructure providers, specialized chip manufacturers, and enterprise software companies building AI tools.

"We're not avoiding disruption," says a Goldman partner who spoke on condition of anonymity. "We're financing it."

This isn't just about picking winners and losers. It's about recognizing that AI disruption creates massive capital needs. Building AI requires enormous upfront investment in hardware, software, and talent—exactly the kind of financing gaps that private credit traditionally fills.

The Institutional Divide

Not everyone's convinced. CalPERS, the largest U.S. pension fund, has reduced its private credit allocation by $12 billion this year. Their concern isn't just about AI—it's about the broader economic uncertainty that technological disruption creates.

"We're seeing a fundamental repricing of risk," explains Sarah Chen, CalPERS' chief investment officer. "The traditional models for evaluating credit risk may not apply when entire business models can be obsoleted overnight."

Meanwhile, sovereign wealth funds from the Middle East and Asia are taking the opposite approach, increasing their private credit allocations by $67 billion combined. They're betting that AI disruption will create more opportunities than it destroys.