DoubleLine and Oaktree Capital are buying up debt tied to artificial intelligence, but not as a bet on the sector's explosive growth. The two asset managers are positioning themselves to hedge against a potential AI credit bust, according to a report published this week on Crypto Briefing. Their strategy leans on cautious investment, picking deals based on fundamentals rather than chasing the speculative tail of the AI boom.
Why the caution?
The move comes as the AI industry faces mounting pressure to justify sky-high valuations and massive capital expenditures. Looming defaults on loans extended to cash-burning startups could ripple through credit markets. DoubleLine and Oaktree aren't walking away — they're buying the debt, but on their own terms.
By focusing on underlying fundamentals, the firms are effectively betting that many AI companies won't survive the bust but that the debt itself — properly priced and structured — can still deliver returns. It's a play for yield with a heavy dose of risk management.
The strategy: fundamentals first
The approach marks a departure from the flood of capital that fueled AI's rapid expansion over the past two years. DoubleLine and Oaktree are looking at cash flows, collateral, and covenants rather than revenue multiples or hype. Their emphasis on fundamentals means they're likely targeting more mature companies or deals with stronger protections, leaving the riskier end of the market to others.
That selectivity could become more common if the credit cycle turns. For now, the two firms are among the first large institutional names to openly signal a defensive posture on AI debt.
What this means for AI credit markets
The signal from DoubleLine and Oaktree doesn't mean an AI credit crash is imminent. But it does suggest that some of the smartest money in distressed debt sees cracks forming. If more asset managers follow suit, borrowing costs for AI startups could rise, and the window for easy financing may narrow.
That would put pressure on companies that relied on cheap debt to fund their burn rates. The ones with solid fundamentals — and the balance sheets to back them up — will likely still find capital. The rest might not.
