CARLYLE WARNS AI CREDIT BOOM POSES CONCENTRATION RISK

Carlyle Co-President Mark Jenkins cautioned that private credit's aggressive push into data centers and hyperscalers mirrors patterns that preceded the "SaaS apocalypse," when seemingly diversified portfolios crumbled under volatility. The concern centers on capital concentration. As private credit deploys billions into AI infrastructure—data centers, chip production, and compute capacity—lenders face mounting exposure to a single narrative. When market conditions shift, this concentration can trigger cascading losses across portfolios that appeared balanced on paper. Jenkins flagged specific risks: complex data-center contracts with intricate terms can unravel unexpectedly, and hyperscaler business models remain unproven at scale. The sector's explosive growth has attracted massive capital inflows, but fundamental credit analysis may be outpaced by hype. The warning underscores a persistent market dynamic: diversification principles matter more during booms than bears, yet tend to be abandoned when returns look guaranteed. Carlyle's message: AI credit exposure requires rigorous stress-testing and disciplined position-sizing, not faith in perpetual growth.