Goldman Sachs has reaffirmed its Buy recommendation on Apollo Global Management (NYSE:APO) and left its price target unchanged at $165.00 after reviewing the firm’s most recent quarterly results. That target mirrors the analyst consensus, which also centers on $165. On the basis of current share prices and that consensus target, the stock carries an implied upside of about 24%.
Market data cited in the company review indicates Apollo appears marginally undervalued on a Fair Value assessment. Goldman Sachs pointed to a set of operating metrics that it viewed as evidence of a strong quarter.
Among the performance highlights were originations of $97 billion and gross capital deployment of $113 billion for the quarter, compared with $97 billion and $75 billion, respectively, in the prior quarter. These deployment figures stood out even as Apollo reported revenue that has fallen 14.06% over the trailing twelve months.
Investor inflows and assets under management also showed notable progress. The firm produced $41 billion of organic inflows across asset management and retirement services, with $28 billion of that total originating in asset management. Fee-paying assets under management rose 4% quarter-over-quarter to $709 billion, a level described as slightly above consensus forecasts.
Goldman Sachs characterized the quarter as strong and said there was "little to pick at," citing several specific positives: a management fee beat, healthy growth in fee-paying AUM, continued momentum in deployment and originations, and a normalized retirement services spread of 124 basis points versus an expectation of 121 basis points.
Additional financial health metrics referenced in the analyst review show Apollo holding a "GOOD" overall score of 2.69, with profit measures singled out as particularly strong. The company’s market capitalization stood at $77.21 billion at the time of the report.
Goldman Sachs also noted that fee-related earnings from Apollo’s third-party business are expanding at roughly twice the pace of spread-related earnings. That dynamic supports the analyst view that the stock could be a candidate for a positive price-to-earnings ratio rerating from an estimated level of about 13 times 2027 price-to-earnings, net of stock-based compensation.
At present, Apollo is trading at a price-to-earnings ratio of 19.41. The company yields 1.53% in dividends, has paid dividends for 15 consecutive years, and recorded dividend growth of 10.27% over the last twelve months.
In company-specific news disclosed alongside the quarter, Apollo reported an adjusted fourth-quarter earnings per share of $2.47, beating estimates by $0.43. Revenue for the period reached $9.86 billion, broadly outpacing the consensus expectation of roughly $5.3 billion.
Separately, Apollo is reported to be close to finalizing a $3.4 billion loan for an investment vehicle that will acquire Nvidia chips to lease to xAI. That arrangement would be Apollo’s second major chip-leasing investment with xAI following an earlier $3.5 billion loan. The firm also plans to take an equity stake in the new vehicle, which intends to raise a combined $5.3 billion of equity and debt.
Taken together, the metrics and disclosed transactions underline Apollo’s ongoing focus on fee-based growth and selective financing activity. The firm’s mix of third-party fee expansion, sizable capital deployment and strategic financing arrangements were central to Goldman Sachs’ decision to maintain its rating and target.
Summary
Goldman Sachs has reiterated a Buy rating and a $165 price target on Apollo Global Management following a quarter marked by strong originations, elevated capital deployment and improving fee income trends. These positives come despite a year-over-year revenue decline. Apollo’s fee-paying AUM rose modestly and the company reported earnings and revenue beats for the quarter. The firm is also nearing a substantial loan financing tied to leasing Nvidia chips to xAI.
Key points
- Goldman Sachs maintains a Buy rating and $165 price target, aligned with consensus and implying about 24% upside - impacts Financials and Investment sectors.
- Apollo posted $97 billion in originations and $113 billion in gross capital deployment, up from $75 billion in deployment in the prior quarter - relevant to Asset Management and Credit markets.
- Fee-paying AUM rose 4% quarter-over-quarter to $709 billion and organic inflows totaled $41 billion, with $28 billion from asset management - affecting Retirement Services and Asset Management sectors.
Risks and uncertainties
- Revenue has declined 14.06% over the past twelve months, which could weigh on profitability metrics if the trend continues - risk for Financials and Asset Management participants.
- The potential for valuation movement rests on a shift from spread-related to fee-related earnings and any change in that dynamic would affect the expected P/E rerating - relevant to investors and equity markets.
- Large financing commitments, such as the near-complete $3.4 billion loan to fund a chip-leasing vehicle, carry execution and counterparty risks tied to the Technology and Financing sectors.