Global investment firm KKR recently sought to calm nervous investors about the future of software in the age of AI.
This reassurance was urgently needed. In early 2026, the tech world was shaken by what many called 'software-mageddon.' The rapid advancement of AI, particularly from companies like Anthropic, sparked fears that new AI tools could simply replace existing software companies. This wasn't about AI helping software (augmentation), but about making it obsolete (replacement). The market reacted swiftly, with investors selling first and asking questions later. In just one week, nearly $1 trillion in value was wiped from U.S. software stocks, and KKR's own stock price fell about 30%.
In this climate of fear, KKR's CFO, Robert Lewin, stepped forward with a clear message: their software portfolio will have 'more winners than losers.' This was a strategic shift in conversation. Instead of debating whether the entire software industry was at risk, he reframed the issue to be about selectivity. The new question became: which companies are durable enough to survive and thrive? KKR's view is that mission-critical software—the kind deeply embedded in a company's core operations—and tools that cleverly bundle AI features will be the 'winners.' Generic, easily replicated software, however, faces a real risk of being pushed aside.
This 'winners vs. losers' narrative is amplified by two major economic factors. First, the era of near-zero interest rates is over. The Federal Reserve's decision to keep rates 'higher-for-longer' means that money is more expensive, which puts pressure on growth-oriented software companies that often rely on future profits. Investors are now forced to be much more discerning about where they put their capital.
Second, the anxiety has spilled over into credit markets. Lewin acknowledged that KKR’s publicly traded credit funds, known as BDCs, were feeling the pressure from software-related fears. This shows the problem was widespread, affecting not just stock valuations but also the loans backing these companies. It underscored the urgency for KKR to articulate a clear strategy for navigating this new landscape.
Ultimately, KKR's message is a calculated effort to manage perceptions, backed by internal strategy. The firm had already been stress-testing its portfolio, noting software makes up only about 7% of its assets under management. They had proactively sold off investments where AI posed a significant threat. By highlighting the 'winners' and acknowledging there will be 'losers,' KKR is signaling a move toward a more focused, resilient investment approach in the new AI-driven world.
- AUM (Assets Under Management): The total market value of the investments that an entity manages on behalf of clients.
- BDC (Business Development Company): A type of publicly traded company in the U.S. that invests in small and mid-sized businesses.
- Disintermediation: The process of removing the 'middleman.' In this context, it means AI could perform tasks that currently require specific software, making that software obsolete.