Goldman Sachs' asset management division has informed investors that GS Credit's redemption activity remains significantly lower than that of many rivals, distinguishing the firm as private credit markets face renewed investor caution tied to the potential for artificial intelligence to disrupt software firms.
In a letter circulated to investors and reviewed by Reuters, Goldman said its Goldman Sachs Private Credit Corp saw December inflows that were 11% higher than the year-to-date average. The firm reported a fourth-quarter redemption rate of 3.5% at GS Credit, noting this level was below the more than 5% redemption rates reported by peer firms.
Those figures come as market participants reassess exposure to private credit, a major source of lending to technology companies, amid growing concerns that AI could erode software companies' earnings power and, by extension, their ability to service loans. The firm noted that the private credit market itself has expanded substantially in recent years into roughly a $2 trillion segment of the alternatives industry.
Goldman acknowledged a broader shift in sentiment among investors and said that such worries have been intensified by fresh issues at Blue Owl related to asset sales. Those developments have contributed to a sharp decline in the share prices of alternative asset managers with private credit operations, according to the firm's letter.
In its letter Goldman wrote that entering 2026 the private credit landscape faces a mix of volatile macroeconomic conditions, changing flows across traded and non-traded Business Development Company markets, and rapid technological change - particularly around AI. The firm disclosed that GS Credit's exposure to enterprise software credit stood at about 15.5% at the end of the third quarter, which it described as toward the lower end of the range reported by peers.
Goldman said it has been evaluating the potential effects of AI on the software sector for several years. The firm noted that it declined to pursue its first deal for that reason in October 2023. In the investor letter Goldman stated that it shares the view that AI is substantially lowering development costs and that this is likely to increase competitive intensity for incumbent software providers.
The firm emphasized that it focuses on lending to businesses that demonstrate "structural advantages and incumbency moats" that could make them harder for new entrants to displace. Goldman also said it deployed its first internal framework to assess AI disruption risk in early 2025, and reiterated that it does not underestimate the risk posed by AI to the software landscape.
Separately, the investor letter highlighted continued demand for Goldman Sachs Private Credit Corp. The firm described December inflows being 11% above the year-to-date average and reiterated the 3.5% fourth-quarter redemption rate for GS Credit compared with more than 5% for peers.
Finally, the communication included a promotional note aimed at investors evaluating Goldman shares. It asked whether GS is a bargain and described a proprietary Fair Value calculator that uses a mix of 17 industry valuation models to assess GS and other stocks. That material suggested the tool as a means to identify undervalued securities.