UBS analyst Matthew Mish predicts tens of billions of dollars in corporate loan defaults as AI threatens software firms. Models from Anthropic and OpenAI accelerate AI disruption expectations, catching markets off guard. Mish warns of a potential credit crunch and $75-120 billion in defaults by year end. Companies face uncertainty in AI adoption timing and model improvements.

Mish highlights three categories of companies in the AI trade: foundational large language model creators like Anthropic and OpenAI, investment-grade software firms like Salesforce and Adobe, and private equity-owned software companies with high debt levels. Winners in the disruptive AI landscape likely won’t come from the third category.

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1. Apple announced a new virtual reality headset that will be more expensive than competitors at around $3,000. The headset is expected to be released in 2022.

2. Tesla reported fourth-quarter earnings that beat expectations, with revenue reaching $10.74 billion. The company also announced plans to build a new Gigafactory in Texas.

3. The Federal Reserve left interest rates unchanged and said it would continue its bond-buying program to support the economy amid the ongoing pandemic. The decision was widely anticipated by investors.

4. GameStop shares surged over 100% in a single day, fueled by a rally driven by Reddit traders. The stock has become a battleground between retail investors and Wall Street hedge funds.

5. Airbnb reported a loss of $3.9 billion in 2020 due to the impact of the pandemic on travel. The company has been working to adapt its business model to the changing market conditions.: AI disruption could hit credit markets next, UBS analyst says