Diameter Says AI Is Like Shale Boom, Could Hurt Private Credit

Diameter Capital Partners is ready to pounce on the financial fallout from artificial intelligence, saying the technology will sort winners and losers “ferociously” in a manner reminiscent of the US shale boom.

The New York-based asset manager has been cashing in on the AI theme with adjacent bets on telecommunication firms and data centers, according to a quarterly letter to limited partners seen by Bloomberg News. But co-founders Scott Goodwin and Jonathan Lewinsohnsaid companies are financing the pursuit of advanced AI with debt that some won’t be able to repay.

“AI is now at the early stage where resources ...