Investors are shunning the most troubled US junk bonds even as they embrace riskier assets in other corners of the market. The reluctance stems from growing concerns that artificial intelligence could disrupt traditional software companies, making their debt increasingly precarious. This divergence highlights how AI anxiety is reshaping credit market dynamics.

Software companies face particular scrutiny because AI threatens to render established business models obsolete. Investors in high-yield bonds are factoring in the risk that AI-driven competition could crush earnings and cripple ability to service debt. The result is a pronounced discount on bonds from software firms deemed vulnerable to technological disruption.

Yet the caution is selective. Investors continue pouring money into junk debt elsewhere, signaling confidence in sectors less exposed to AI disruption. The gap underscores how technology fears are driving a bifurcated market where software-adjacent borrowers pay a premium for capital while peers in more stable industries enjoy easier access to financing.