Apollo Bets Against Software

What happened

Apollo Global Management has strategically reduced its exposure to the software sector by shorting related loans. This action reflects a bearish outlook, driven by concerns that artificial intelligence advancements pose a significant threat to traditional software business models. Concurrently, Apollo is expanding investments into energy infrastructure, indicating a diversification away from sectors perceived as vulnerable to AI disruption. This shift aims to capitalise on anticipated market downturns within the software industry.

Why it matters

Apollo's strategic shift introduces an increased exposure to market volatility and potential devaluation within the software sector, driven by the disruptive impact of artificial intelligence. This creates a visibility gap for investment analysts and portfolio strategists regarding the long-term stability of software-centric assets. Consequently, risk management and procurement teams face higher due diligence requirements when evaluating software investments or dependencies, necessitating a re-evaluation of existing portfolio allocations and vendor relationships.