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AI disruption could hit credit markets next, UBS analyst says

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AI disruption could hit credit markets next, UBS analyst says

Mesh Cube | Istock | Getty Images

The stock market has been quick to punish software firms and other perceived losers from the artificial intelligence boom in recent weeks, but credit markets are likely to be the next place where AI disruption risk shows up, according to UBS analyst Matthew Mish.

Tens of billions of dollars in corporate loans are likely to default over the next year as companies, especially software and data services firms owned by private equity, get squeezed by the AI threat, Mish said in a Wednesday research note.

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“We’re pricing in part of what we call a rapid, aggressive disruption scenario,” Mish, UBS head of credit strategy, told CNBC in an interview.

The UBS analyst said he and his colleagues have rushed to update their forecasts for this year and beyond because the latest models from Anthropic and OpenAI have sped up expectations of the arrival of AI disruption.

“The market has been slow to react because they didn’t really think it was going to happen this fast,” Mish said. “People are having to recalibrate the whole way that they look at evaluating credit for this disruption risk, because it’s not a ’27 or ’28 issue.”

Investor concerns around AI boiled over this month as the market shifted from viewing the technology as a rising tide story for technology companies to more of a winner-take-all dynamic where Anthropic, OpenAI and others threaten incumbents. Software firms were hit first and hardest, but a rolling series of selloffs hit sectors as disparate as finance, real estate and trucking.

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In his note, Mish and other UBS analysts lay out a baseline scenario in which borrowers of leveraged loans and private credit see a combined $75 billion to $120 billion in fresh defaults by the end of this year.

CNBC calculated those figures by using Mish’s estimates for increases of up to 2.5% and up to 4% in defaults for leveraged loans and private credit, respectively, by late 2026. Those are markets which he estimates to be $1.5 trillion and $2 trillion in size.

‘Credit crunch’?

But Mish also highlighted the possibility of a more sudden, painful AI transition in which defaults jump by twice the estimates for his base assumption, cutting off funding for many companies, he said. The scenario is what’s known in Wall Street jargon as a “tail risk.”

“The knock-on effect will be that you will have a credit crunch in loan markets,” he said. “You will have a broad repricing of leveraged credit, and you will have a shock to the system coming from credit.”

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While the risks are rising, they will be governed by the timing of AI adoption by large corporations, the pace of AI model improvements and other uncertain factors, according to the UBS analyst.

“We’re not yet calling for that tail-risk scenario, but we are moving in that direction,” he said.

Leveraged loans and private credit are generally considered among the riskier corners of corporate credit, since they often finance below-investment-grade companies, many of them backed by private equity and carrying higher levels of debt.

When it comes to the AI trade, companies can be placed into three broad categories, according to Mish: The first are creators of the foundational large language models such as Anthropic and OpenAI, which are startups but could soon be large, publicly traded companies.

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The second are investment-grade software firms like Salesforce and Adobe that have robust balance sheets and can implement AI to fend off challengers.

The last category is the cohort of private equity-owned software and data services companies with relatively high levels of debt.

“The winners of this entire transformation — if it really becomes, as we’re increasingly believing, a rapid and very disruptive or severe [change] — the winners are least likely to come from that third bucket,” Mish said.

Technology private equity in its current form is dead, says Lightspeed's Kim
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Gavin Newsom expands California’s mortgage relief plan

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Gavin Newsom expands California's mortgage relief plan

Democratic Gov. Gavin Newsom is taking a direct shot at the Trump administration, expanding a state mortgage relief program to $100,000 per household while accusing the White House of “turning its back” on California fire survivors. 

On Thursday, Newsom announced that disaster-affected homeowners now qualify for a full 12 months of mortgage payment relief, a significant increase from the previous three months, with a total increase to $100,000.

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The maximum assistance per household skyrocketed from the original $20,000. According to a state press release, the funds are non-repayable grants with payments going directly to mortgage providers.

To date, $6.5 million has allegedly been paid to 793 recipients, primarily from the Palisades and Eaton fires, leaving a significant portion of the fund’s $1 billion budget still available.

CALIFORNIA RESIDENTS FACE BRUTAL CHOICE ONE YEAR AFTER LOS ANGELES FIRES DESTROYED THEIR LIVES

Gov. Newsom’s office did not immediately respond to Fox News Digital’s request for comment.

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Gavin Newsom answers press questions

Gavin Newsom, governor of California, attends the 62nd Munich Security Conference Feb. 13, 2026. (Kay Nietfeld/picture alliance via Getty Images)

The move signals an aggressive shift by Sacramento to bypass a stalled federal disaster package and provide direct cash infusions to high-income homeowners.

In a press release, Newsom also called President Trump’s response a “lie” and a “disgrace” as the state moves to fill a perceived federal aid gap.

“We’ve been on the ground, listening and adjusting to meet people’s evolving needs. That’s why we’re expanding this program — to close the gap between relief and long-term recovery and make sure folks get the help they need to move forward,” Newsom said.

But federal officials at the Small Business Administration and White House argue that $3.2 billion in federal loans are already approved but are being blocked by California’s “local permitting backlogs” and “red tape.”

SBA Administrator Kelly Loeffler previously called California’s state and local permitting backlog a “nightmare” that has dragged out wildfire recovery.

“With President Trump’s leadership and alongside EPA, the SBA is opening an expedited path to recovery for every borrower who has been held hostage by the bureaucracy of Gavin Newsom and Karen Bass,” Loeffler said.

Though the Palisades and Eaton fires were contained by the end of January 2025, the Los Angeles County Economic Development Corporation reports that they caused up to $53.8 billion in property damage alone.

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The department’s research also found extraordinarily high destruction rates, with the Palisades Fire destroying 56.3% of all assessed structures and 55.8% of single-family homes. The Eaton Fire destroyed about 50% of all structures and single-family homes.

Additionally, more than 160 lending institutions have already agreed to offer 90-day forbearance extensions beyond the legally required 12 months; and the state has pushed to use rebuilding funds to incentivize “all-electric” homes, costing anywhere from $3,000 to $10,000 less than mixed-fuel homes but aligning with California’s climate mandates.

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Fox News’ Amanda Macias contributed to this report.

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Form 144 Strategy Inc For: 13 February

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Form 144 Strategy Inc For: 13 February

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Andrew facing claim he shared Treasury document with banking contact

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Andrew facing claim he shared Treasury document with banking contact

Reports suggest the former prince shared a Treasury document when he was serving as trade envoy.

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Rivian (RIVN) earnings Q4 2025

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Rivian (RIVN) earnings Q4 2025
Rivian CEO on earnings, guidance: R2 deliveries expected to begin in Q2

Rivian Automotive on Thursday beat Wall Street’s fourth-quarter expectations and said it’s targeting a significant increase in vehicle deliveries this year, but the automaker also cautioned that it will continue losing money as it launches its crucial R2 next-generation vehicle.

Rivian’s 2026 guidance includes increasing vehicle deliveries to between 62,000 and 67,000 units, which would be up by 47% to 59% compared with 2025. That increase is expected to be assisted by the launch of the R2 SUV during the second quarter.

Rivian CEO RJ Scaringe told CNBC’s Phil LeBeau on Thursday that the R2 is expected to be the “majority of the volume” of the business by the end of 2027, as it ramps up production at its sole factory in Normal, Illinois.

The electric vehicle maker also said it expects adjusted pre-tax losses for 2026 of between $1.8 billion and $2.1 billion and capital expenditures between $1.95 billion and $2.05 billion. That compares with nearly $2.1 billion in adjusted pre-tax losses and $1.7 billion in capital expenditures last year.

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Scaringe described 2025 to investors Thursday as a “foundational year” for Rivian, while saying 2026 will mark “an inflection point” for the company.

Shares of Rivian were up more than 20% during premarket trading Friday after closing at $14, down roughly 5%.

Why the R2 could be Rivian's key to profitability

Here’s how the company performed in the fourth quarter compared with average estimates compiled by LSEG:

  • Loss per share: 54 cents adjusted vs. a loss of 68 cents expected
  • Revenue: $1.29 billion vs. $1.26 billion expected

Rivian’s full-year 2025 revenue, including $1.7 billion during the fourth quarter, was up 8% compared with $4.97 billion in 2024.

The company was able to achieve its first annual gross profit, which is closely watched by investors, of $144 million in 2025, including $120 million during the fourth quarter. That was driven by its software and services joint venture with Volkswagen offsetting $432 million in losses for its automotive business last year.

This year’s gross profit may not be as fruitful, with Rivian CFO Claire McDonough describing it as a “transition year” as it ramps up R2 production.

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Investors view gross profit as a key indicator of a business’s profitability before operating expenses, interest and taxes.

Rivian’s net loss last year was $3.6 billion, an improvement from a loss of $4.75 billion in 2024. That includes an $804 million loss during the fourth quarter, accelerated by a decrease in earnings from the sale of regulatory credits, which was expected after changes by the Trump administration to federal fuel economy and emissions standards.

Rivian ended the fourth quarter with $6.59 billion in total liquidity, including nearly $6.1 billion in cash, cash equivalents, and short-term investments.

It’s needed capital for Rivian. This year is a crucial one for the automaker as it attempts to deliver on promises of technological advancements and improved profitability with the R2.

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The roughly $45,000 midsize vehicle, per Rivian, is expected to cut build material costs in half, reduce production complexity and significantly grow demand and sales.

Rivian said the R2 is expected to initially be produced by one plant shift, followed by a second shift by the end of this year. The company said additional R2 details by model such as pricing, options and more will be available on March 12.

Rivian has made important strides with its first-generation R1 pickup and SUV, but the market for such pricey EVs, which both start in the $70,000s, has slowed. It also continues to produce an all-electric delivery van, historically purchased by its largest shareholder, Amazon.

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Americans see gas price relief as costs fall annually in January 2026 CPI data

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Americans see gas price relief as costs fall annually in January 2026 CPI data

Americans are getting some relief from lower gasoline prices, which the latest inflation data from the Labor Department shows have declined substantially over the last year.

The Bureau of Labor Statistics on Friday released the consumer price index (CPI) for January, which showed headline inflation was up 2.4% from a year ago, while core CPI, which excludes volatile measurements of food and energy, was up 2.5% in that period.

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Energy prices fell 1.5% in January and have been largely flat over the last year, down just 0.1% in that period, with much of the downward pressure coming from falling gas prices.

The index for all types of gasoline showed prices fell 3.2% in the month of January and are down 7.5% in the last year, according to the BLS data.

INFLATION EASED SLIGHTLY IN JANUARY BUT REMAINED WELL ABOVE THE FED’S TARGET

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Gas prices have declined over the last year, helping household budgets. (Justin Sullivan/Getty Images)

The U.S. Energy Information Administration and Federal Reserve showed the average price of gas nationwide was $2.90 a gallon as of Feb. 10. 

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On that date last year, gas was $3.13 a gallon, which represents a decline of about 7.3%, roughly in line with the January CPI data.

The latest CPI inflation data showed relief in other categories of energy as well. 

CALIFORNIA ‘TRULY AT A BREAKING POINT,’ STATE SENATOR SAYS AS REFINERIES CLOSE AND GAS PRICES SURGE

Propane, kerosene and firewood costs declined 1.5% on a monthly basis and were down 7.9% from a year ago.

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The price of fuel oil fell 5.7% in January and has decreased 4.2% over the last year.

While gas prices and those categories of energy have provided relief to consumers, other types of energy have seen prices surge, undercutting some of that relief.

TRUMP CONSIDERS CAPPING STATE GAS TAX, SIGNALS POSSIBLE RELIEF FOR CALIFORNIANS

A view of a gas pump at a Sunoco station

Gasoline prices fell in January, according to the latest consumer price index data. (Al Drago/Bloomberg via Getty Images)

Electricity prices were little changed on a monthly basis and fell 0.1% on a monthly basis, but are up 6.3% in the last year.

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Utility gas service costs jumped 1% in January and are 9.8% higher than last year, a substantial price hike for households relying on gas to help heat their homes this winter.

Raymond James Chief Economist Eugenio Aleman said in a note that the “picture for February’s CPI will probably be very different than January’s as energy prices are probably going to show positive prints.” 

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“However, we don’t expect increases in transportation services prices to remain as strong during the month, and, thus, inflation’s behavior will probably depend on how strong the reversal in energy prices was in February and what happens to shelter prices during the month,” he added.

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Alnylam Hit Hard As Investors Forced To Revise Future Profit Expectations (ALNY)

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Alnylam Hit Hard As Investors Forced To Revise Future Profit Expectations (ALNY)

This article was written by

Stephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ALNY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Form 10Q CLEARTRONIC For: 13 February

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Form 10Q CLEARTRONIC For: 13 February

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Applied Materials: Little Opportunity Left After A Monstrous Run

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Applied Materials: Little Opportunity Left After A Monstrous Run

Applied Materials: Little Opportunity Left After A Monstrous Run

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Kinsale Capital Group, Inc. (KNSL) Q4 2025 Earnings Call Transcript

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OneWater Marine Inc. (ONEW) Q1 2026 Earnings Call Transcript

Q4: 2026-02-12 Earnings Summary

EPS of $5.81 beats by $0.50

 | Revenue of $483.27M (17.26% Y/Y) beats by $15.89M

Kinsale Capital Group, Inc. (KNSL) Q4 2025 Earnings Call February 13, 2026 9:00 AM EST

Company Participants

Michael Kehoe – Chairman of the Board & CEO
Bryan Petrucelli – Executive VP, CFO & Treasurer
Stuart Winston – Executive VP & Chief Underwriting Officer

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Conference Call Participants

Michael Phillips – Oppenheimer & Co. Inc., Research Division
Andrew Andersen – Jefferies LLC, Research Division
Michael Zaremski – BMO Capital Markets Equity Research
Hristian Getsov – Wells Fargo Securities, LLC, Research Division
Mark Hughes – Truist Securities, Inc., Research Division
Joseph Tumillo – BofA Securities, Research Division
Rowland Mayor – RBC Capital Markets, Research Division
Pablo Singzon – JPMorgan Chase & Co, Research Division
Andrew Kligerman – TD Cowen, Research Division

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Presentation

Operator

Thank you for standing by. My name is Karly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinsale Capital Group Q4 2025 Earnings Conference Call. [Operator Instructions] Before we get started, let me remind everyone that through the course of the teleconference, Kinsale’s management may make comments that reflect their intentions, beliefs and expectations for the future. As always, these forward-looking statements are subject to certain risk factors, which could cause actual results to differ materially. These risk factors are listed in the company’s various SEC filings, including the 2023 annual report on Form 10-K, which should be reviewed carefully.

The company has furnished a Form 8-K with the Securities and Exchange Commission that contains the press release announcing its fourth quarter results. Kinsale’s management may also reference certain non-GAAP financial measures in the call today. A reconciliation of GAAP to these measures can be found in the press release, which is available at the company’s website at www.kinsalecapitalgroup.com.

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I will now turn the conference over to Kinsale’s Chairman and CEO, Mr. Michael Kehoe. Please go ahead, sir.

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Microsoft: I Like This Price And I Like This Strategy More Than The Stock (NASDAQ:MSFT)

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Microsoft: I Like This Price And I Like This Strategy More Than The Stock (NASDAQ:MSFT)

This article was written by

“Fundamental Options” would be the title of my investing style, because I combine fundamental analysis with the power of options. I use Fundamental Analysis to quantitatively and qualitatively assess individual stocks and ETFs, and I pursue various strategies: Income oriented, especially BDCs, but also Utilities; Growth At A Reasonable Price, especially Tech, having a background in Software Development; Deep Value, based on Discounted Cash Flow and / or other industry specific valuation methods; Dividend Aristocrats.While I usually invest in stocks for long-term, I also have 20-25 strategies involving options that I use for various purposes: hedging stocks; bullish stock / ETF substitutes with improved risk / reward; neutral trades; trading volatility; earnings-related trades.Teaching is another passion of mine, I used to be a formal on non-formal teacher or coach in different areas of life, including authoring of a free local investing newsletter in the last years.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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