KKR plunges 9.7% after $10.9B data-center deal amid AI sell-off
Private equity giant's AI infrastructure bet overshadowed by broader concerns about software disruption hitting credit portfolios
KKR shares tumbled 9.7% to $103.28 on Tuesday, wiping out more than $11 billion in market value, even as the private equity giant unveiled one of Southeast Asia's largest digital infrastructure acquisitions. The steep decline occurred on trading volume of 11.5 million shares—2.5 times the daily average—as broader concerns about artificial intelligence disruption to the software sector weighed heavily on private credit and alternative asset managers.
The New York-based investment firm announced a definitive agreement to acquire an 82% stake in ST Telemedia Global Data Centres (STT GDC) from Singapore state investor Temasek Holdings, valuing the company at an enterprise value of S$13.8 billion ($10.9 billion). The consortium, which includes Singapore telecommunications giant Singtel, will pay S$6.6 billion ($5.1 billion) for the controlling stake, with KKR ultimately holding 75% of the business and Singtel retaining 25%.
The transaction represents a doubling down on AI infrastructure for KKR, which first invested in STT GDC in June 2024 with a S$1.75 billion minority stake. STT GDC operates 64 data centers across 18 markets in Asia and Europe, with a global design capacity of 2.3 gigawatts and a development pipeline exceeding 1.7 gigawatts across 12 major markets. The deal is expected to close in the early second half of 2026, subject to regulatory approvals.
Yet the strategic move failed to reassure investors, who instead focused on mounting fears that private credit firms with significant exposure to software companies face substantial risks from AI-driven automation. KKR joined peers including Blackstone, Ares Management, and Blue Owl Capital in a broad sell-off that has accelerated in recent weeks as investors reassess the vulnerability of software-dependent businesses to AI disruption.
According to CNBC, shares of private credit firms have plunged on growing concern about exposure to industries being disrupted by artificial intelligence, particularly software. The report highlights that alternative asset managers have become increasingly exposed to the technology sector through direct lending and private credit strategies that flourished during the era of rising interest rates.
The technical picture for KKR has deteriorated sharply. The stock's relative strength index fell to 20.25, indicating an extremely oversold condition. KKR now trades 33% below its 52-week high of $154.73 reached last year, though it remains above its 52-week low of $85.77. The shares are now trading below both their 50-day moving average of $127.29 and 200-day moving average of $128.95, suggesting a broken intermediate-term trend.
Despite the steep decline, analysts maintain an overwhelmingly bullish outlook. The consensus target price stands at $159.21, representing 54% upside from current levels. Of the 20 analysts covering the stock, six rate it a strong buy and twelve recommend buying, with just two holding neutral ratings and zero sell recommendations, according to market data.
The STT GDC acquisition aligns with KKR's broader strategy of capitalizing on the massive data center build-out required to support AI workloads. As cloud providers and technology companies race to expand computing capacity, data center operators have emerged as critical infrastructure players. STT GDC's footprint across Asia Pacific positions KKR to benefit from the region's growing demand for digital infrastructure, particularly in markets like Singapore, India, and China where data localization requirements are driving domestic capacity expansion.
Analysts suggest the deal could lead to further consolidation, with potential long-term merger possibilities between STT GDC and Singtel's Nxera data center business. Such a combination would create a global player with significant scale across key markets.
The disconnect between KKR's strategic positioning in AI infrastructure and the stock's performance underscores a growing market schizophrenia: investors simultaneously rewarding companies building the physical backbone of AI while punishing those with exposure to software businesses that AI may disrupt. For KKR, the challenge will be demonstrating that its credit portfolios are resilient while convincing investors of the long-term value proposition of its infrastructure investments.