The outlook for distressed assets in the second half of 2026 highlights elevated costs of capital and a particular focus on software-related debt.

Investors in loans and private credit are catching up to fears about artificial intelligence, which have already impacted stock and bond markets, raising concerns about a singularity in software debt.

Investor Michael Burry has reportedly bought the dip in Salesforce and other software stocks following an AI-fueled sell-off. He expressed confidence that technical pressures from private credit and software debt issues would not significantly affect these stocks for much longer.

Private Credit Should Worry About a Singularity in Software Debt  Bloomberg.com