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AI expansion fuels borrowing risks for software firms
AI-driven borrowing has increased credit stress for software firms facing delayed monetisation and rising interest costs.
Software companies increased borrowing to fund AI infrastructure, cloud usage and talent hiring, raising early signs of credit stress. Higher interest costs and delayed revenue generation pressured cash flows. Lenders are monitoring leverage as profitability timelines extend. Mid-sized and venture-backed firms remain more exposed due to limited balance sheet flexibility.