‘Money Will Be Made and Money Will Be Lost’: KKR Sounds Off on AI Boom and Private Credit

KKR & Co. (NYSE:KKR) expects a record year for private credit fundraising, and co-CEO Scott Nuttall warned that the rapid pace of artificial intelligence investment will create both winners and losers.

The comments come as private markets face growing questions about software companies, AI disruption and the risks building across private credit.

"This year alone we’ve heard worries about software, private credit, private wealth, private equity, monetizations … the impact of higher interest rates," Nuttall said during KKR’s third-quarter earnings call Monday. "There has been a lot thrown at you and no shortage of things to worry about."

Despite those concerns, KKR posted record results for a second straight quarter. Adjusted earnings of $1.78 per share topped the $1.59 estimate, and revenue of $2.608 billion was nearly in line with the $2.596 billion estimate, according to Benzinga Pro.

The firm raised $14 billion in credit capital during the third quarter, with management expecting a record year for both total third-party credit and private credit specifically.

KKR raised $25 billion in new capital across its businesses during the quarter, bringing its trailing 12-month fundraising total to $116 billion.

KKR Sees AI Opportunity, but Warns of Disruption

Nuttall said KKR sees AI as a major opportunity but is approaching the investment cycle cautiously, given the unprecedented scale and speed of spending.

"Obviously AI is a very large opportunity. We think we’re really well positioned to benefit, but we’re also cognizant of the risks," he said. "And like any set of developments like this, we think money will be made and money will be lost."

KKR has also been evaluating its existing portfolio for potential AI risks. Nuttall said the firm reviewed businesses it owned several years ago to determine whether AI represented an opportunity, a threat or a question mark.

"If it was a threat or a question mark, we decided to try to get out of the way," he said, adding that KKR sold some businesses it was concerned could be disrupted.

The firm has also sold certain investments that benefited significantly from AI demand, including Japan-based semiconductor equipment company Kokusai and cooling business CoolIT.

"You got to make sure you don’t get disrupted," Nuttall said. "We learned that from what happened with the Internet advent."

$85B in Digital Infrastructure and Power Investments

KKR is also putting substantial capital to work in the infrastructure supporting AI. Nuttall said the firm has made roughly $45 billion in equity investments in digital infrastructure and approximately $40 billion in equity investments in power deals.

Still, he emphasized that KKR is trying to avoid becoming overly concentrated in data centers. Its seven data center platforms account for about 6% of infrastructure assets under management.

The firm is also focused on the quality of its customers and long-term commitments. Nuttall said 90% of KKR’s long-term data center lease exposures are tied to governments or investment-grade hyperscalers, while just 3% are associated with neocloud companies.

KKR is also developing its Helix strategy, which combines power, data centers and equipment into a single offering for hyperscalers. The strategy has attracted more than $11 billion in commitments, including a $1 billion commitment from Samsung.

Nuttall said KKR intends to stay disciplined as the AI investment cycle develops, focusing on downside protection and remaining ready to invest if competitors or other market participants run into trouble.

"Sell a bit early — that’s better than a bit late — and focus on your downside," he said.

KKR Price Action: KKR shares were up 1.98% at $98.39 at the time of publication Monday, according to Benzinga Pro data.

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