Nuveen urges selectivity in AI, private credit bets

Binaya Dahal

Journalist

30 June 2026

Nuveen’s Anders Persson has urged investors to be more selective in artificial intelligence and private credit spending, saying stretched valuations, weaker deal structures and rising defaults in parts of the market are widening the gap between winners and losers.

Persson, chief investment officer and head of global fixed income at $1.4 trillion asset manager, said although AI remains one of the defining investment themes, market have moved beyond indiscriminate enthusiasm as it begins to distinguish firms’ capable of monetising the technology and those simply spending to keep pace.

“The AI boom is evolving into something broader, where some investments will benefit from powerful tailwinds while others face meaningful headwinds,” he said.

“Risks are also mounting for companies that cannot demonstrate a credible path to monetising AI.

“Increased spending on AI infrastructure puts pressure on margins and returns on invested capital if that spending doesn’t translate into meaningful revenue growth.”

Persson said software and IT services companies with stretched valuations and elevated default risks were among the more vulnerable areas, while companies with proprietary data advantages and those able to deliver customised client solutions were better positioned to benefit from the next phase of AI adoption.

He added that the similar shift towards greater selectivity was emerging in private credit market as well.

“Increasing headline noise suggests we may be in the midst of a private credit bubble, or that poorly structured deals could trigger broader financial contagion,” Persson said.

“We agree risky segments exist and that some transactions have been structured with excess leverage or weak cash flows. But that reinforces the importance of deal structure, manager selection, proper covenants and careful selectivity.”

The firm said it continues to see attractive opportunities in middle-market direct lending in both the United States and Europe, while expecting performance differences between managers to become increasingly pronounced.

Rather than concentrating portfolios around AI-related sectors, Nuveen noted opportunities in what it described as “old economy” industries including distribution, waste management, stormwater infrastructure, commercial landscaping and pest control.

“On the investment grade side of private credit, rising energy demand creates opportunities through utility operating companies, new power plants and expanding transmission infrastructure,” the firm said.

“And we also see opportunities in other alternative credit segments, including senior loans, collateralized loan obligations, real estate and infrastructure debt and C-PACE financing.”

Beyond AI and private credit, Persson said Nuveen favours higher-quality fixed income sectors while maintaining exposure to income-producing assets such as preferred securities and senior loans.

The firm also remains constructive on municipal bonds, citing strong fundamentals and robust demand.

“Municipal bonds have outperformed the broader fixed income market this year, and credit spreads have tightened – suggesting room for further upside,” it said. 

On portfolio positioning, Persson said Nuveen believes US Treasuries currently offer poor relative value compared with alternatives across global fixed income markets.

With expectations for interest rate cuts repeatedly pushed back and long-term bond yields likely to remain range-bound, the firm recommends maintaining a neutral duration stance and adopting a barbell approach to credit risk.