AI Disruption Looms Over $235B U.S. Software Credit Exposure: MS&M

February 10, 2026 - Morgan Stanley warns AI-driven disruption to the software industry is spilling into U.S. credit markets, as software accounts for about 16% of the $1.5 trillion market, or $235 billion. CONTEXT: The majority of software sector exposure is rated B- or lower—50%—with 20% at B, 26% at CCC, and only 7% at BB. Over 80% of software loans are issued by private companies and nearly 78% are sponsor-backed, limiting transparency and assessing risk. BY THE NUMBERS: The sector has a more front-loaded maturity wall—about 30% of outstanding loans due by 2028 versus 22% for the broader market. Forty-six percent of software debt is due within the next four years, up from less than 35% in the wider market, amplifying refinancing risks if AI disruption materializes quickly. KEY QUOTE: “We expect continued price volatility, but a near-term spike in defaults is unlikely,” the firm said.