What a difference a day makes! Nvidia’s earnings report boasted fourth-quarter profits that nearly doubled, but today, investors appeared bored with the blowout. Shares fell 5.5%, marking its worst loss since last April.   It turns out when every earnings report is great, those earnings become typical — and growth might not go on forever.

It’s not the only part of the AI boom that’s showing cracks. As companies build data centers to power that AI, they need more money than bonds could provide, making them turn to other options like private credit. And that private credit is significantly caught up in software companies… which are being threatened by AI.  Daniel Ackerman explored the private credit market and what its recent performance might mean. — Catie McCarthy, digital producer

Private credit — or borrowing money from investors or money managers, rather than banks — is an increasingly popular way for companies to access capital and expand their business.

 

That market has grown fivefold since the 2008 financial crisis, according to the Federal Reserve, and now sits somewhere near the $2 trillion mark globally. In the last couple weeks, though, the private credit market has gone sideways, and economists aren’t exactly sure what to make of it.

 

After the financial crisis, regulation forced big banks to tighten up their lending practices. Elisabeth de Fontenay, a finance law professor at Duke University, said that made it harder for some companies to get loans.

 

“This has really created an opening for private credit funds to step in,” she said.

 

De Fontenay said private lending can be riskier than bank loans or corporate bonds. But Laura Veldkamp, a finance professor at Columbia University, said that’s part of their appeal.

 

“Typically, you'll get a higher rate of return in private credit,” she said.

 

 Investors tend to have an appetite for that kind of risk.

 

“So you might have an endowment fund, you might have a wealthy person trying to achieve more diversification,” Veldkamp said.

 

As for the companies receiving those loans, Gerald Cohen — finance professor and chief economist of the University of North Carolina at Chapel Hill’s Kenan Institute of Private Enterprise — said a significant amount has been in the software industry.

 

That shouldn’t be a surprise, he said. Software firms are often startups, too small to sell bonds or meet requirements for bank loans. Cohen said the problem right now is that software companies are threatened by the development of artificial intelligence.

Airlines, craft stores, even doctors… Why does every business you visit send a survey these days?

 

NPR dug into how online shopping has made both sellers and consumers consider the value of public reviews. The practice helps products stand out in a crowded market, but consumers are getting frustrated with constant emails asking for feedback on their purchases.

 

Even the person who came up with a notorious customer service question thinks businesses have gone too far. Asking whether you’d recommend this experience or product to a friend is simple enough, but too many — or too long — surveys can have diminishing returns. For now, though, I’ll keep filling out the short questionnaire at Chili’s until they make me write sentences.