Apollo Global Management has adopted a formal process to screen every new software investment for the risk that artificial intelligence could render a business less valuable or obsolete. The approach, designed to address investor concern about rapid technological change, centers on a categorical framework that assesses software companies by how susceptible they are to AI disruption.
Rob Bittencourt, Apollo's head of thematic investing, said the firm developed the risk assessment model last year. The framework divides the software universe into roughly 12 to 14 categories, then ranks those categories according to the degree of vulnerability each faces from AI-driven automation and platform change.
"We also went through our existing portfolio and overlaid that framework on top of our existing portfolio last year to determine where we might want to move on and minimize our risk," Bittencourt said on a Bloomberg Intelligence podcast published Thursday. The overlay exercise was aimed at spotting positions where the firm might reduce exposure or rethink strategy in light of the framework's findings.
Bittencourt characterized recent AI advances as "probably the most profound platform shift that the industry has ever faced." He said firms whose workflows can be replicated or managed by AI are the most exposed. As an example, he pointed to data visualization as a category where tasks can be readily automated, increasing the chance of disruption.
Not all sectors, however, are assessed as equally exposed. Apollo identified areas considered more insulated from AI risk. Healthcare, Bittencourt said, faces significant regulatory constraints that can slow the adoption of AI across industry participants and thus provide a degree of protection for businesses in that sector.
Apollo's move mirrors steps taken at other asset managers grappling with the same investor worries. The article noted that investor concern over concentrated software exposure has pressured equity prices and triggered outflows from the private credit market, which the piece describes as a $1.8 trillion industry. In April, Ares Management hired an external consultant to review software-focused holdings in its largest publicly traded private credit fund. Blackstone and Blue Owl have carried out internal examinations of their software-related investments.
Beyond the framework itself, Bittencourt posed a strategic question for management teams: "Are they acting and articulating a strategic vision that has enough urgency that reflects the pace of change that’s occurring in the underlying technology?" That line of inquiry signals that Apollo is evaluating not just product vulnerability but also leadership response and strategic planning when judging potential investments.
By placing every new software opportunity through a standardized AI-risk lens and revisiting existing positions, Apollo aims to align investment selection and portfolio management with a view of technological change that the firm regards as accelerating.