Blue Owl Capital’s stock dropped 4.1% in pre-market trading after its Q4 2025 earnings release, despite beating analyst expectations on both earnings per share and revenue. Part of that disconnect between results and stock price reflects a broader market caution around private credit — and specific anxiety about software- and AI-related lending books. But the actual portfolio data tells a different story than the price action suggested.
Non-accruals in Blue Owl’s business development companies sat at approximately 0.1% as of the fourth quarter, and the average net realized loss rate for the year came in at 8 basis points — a figure materially below the industry average. Average borrower EBITDA hovered around $300 million, indicating the firm’s loans go primarily to larger, well-established companies rather than early-stage or thinly capitalized businesses.
Tech lending under the microscope
Software and technology credits have drawn the most scrutiny from analysts and investors, partly because of broader questions about whether AI will disrupt legacy software businesses. Co-CEO Marc Lipschultz pushed back on that narrative during the Q4 call, stating, “Performance is the ultimate measure, not anecdote.”
He described Blue Owl Capital’s tech lending portfolio as “the most pristine” among the firm’s subsectors, citing “no red flags” and noting that loans are typically originated at around 30% loan-to-value with substantial equity cushions. Since the commercial launch of ChatGPT in November 2022, borrowers in that portfolio delivered cumulative weighted average revenue growth of nearly 40% and EBITDA growth close to 50%. During Q4 specifically, revenue grew 10% quarter over quarter while EBITDA expanded in the mid-teens.
How conservative underwriting shows up in the numbers
Weighted average loan-to-value ratios remained in the high-30s for direct lending and fell to the low-30s for tech lending. OCIC and OTIC, Blue Owl’s two continuously offered BDCs, generated net returns of 7.4% and 8.4%, respectively, for 2025. Alternative credit portfolios posted 16.6% gross returns for the year.
One area that did draw concern: OTIC experienced elevated redemption requests in Q4, which management attributed to concentrated distribution in Asia. Lipschultz framed OTIC as an outlier — other wealth vehicles had limited non-U.S. exposure — but acknowledged that broader industry headwinds affected non-traded BDC flows across the board during the quarter. For investors trying to separate short-term sentiment from long-term credit fundamentals, the granular data from Blue Owl Capital’s portfolio may prove more informative than the stock ticker.
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