Executives at several large alternative asset managers sought to calm investors this week as a pullback in software equities and earlier worries about private credit continued to pressure their own stock prices.
Leaders from Apollo, Ares, Blackstone, KKR and other private capital firms used recent earnings presentations to defend the makeup of their portfolios, highlighting diversification and limited exposures to the software companies that have been hardest hit by a sector-wide sell-off tied to concerns that artificial intelligence could disrupt current business models.
Those reassurances have helped temper losses in the days following the earnings season, but have not reversed declines accumulated over months. Executives described portfolios they believe are resilient, even as market moves have punished shares across the industry.
Executives' assessments and portfolio disclosures
On an earnings call on February 4, Kort Schnabel, chief executive of a large Ares debt fund, acknowledged the magnitude of the technological threat: "AI is probably the most disruptive technology risk that we could have imagined. I don’t want to sugarcoat it." He added, "But we still believe strongly that we’ve constructed a portfolio that will remain highly resistant to this risk."
When Ares reported results last week, the firm said about 6% of its overall group assets were invested in software companies. CEO Michael Arougheti characterized Ares' software holdings as highly diversified and said a "very small percentage" of them were judged to be at high risk of disruption from AI. Since that communication, Ares' shares have risen slightly but remain roughly 30% lower compared with their level six months ago.
Apollo Chief Executive Marc Rowan told analysts that software accounted for less than 2% of the firm’s assets under management. He described the firm's exposure by business line, saying software "rounds to zero" in private equity and is "rounds closer to zero than to one" in portfolios held by insurance unit Athene. He also said exposure in Apollo Debt Solutions, the fund vehicle that invests in private loans, was half that of its larger peers. That said, Apollo’s own fund disclosures list software as the firm's largest sector at 13.2% of assets, a figure that contrasts with the executive's characterization. Market reaction has been negative: Apollo’s shares have fallen almost 6% so far this week and are down about 11% over the past six months.
KKR reported that roughly 7% of its holdings are in software, while credit-focused Blue Owl said software represents about 8% of its portfolio. Yet both stocks have seen steep declines: KKR shares are down about 29% over the last six months, and Blue Owl shares have plunged more than 36% in the same period.
Even Blackstone, the world’s largest alternative asset manager, has not escaped the sell-off. Its share price has fallen approximately 24% over the past six months. Chief Financial Officer Michael Chae said at a conference in Florida that software comprises 7% of Blackstone’s total assets and about 10% of its credit holdings.
Broader industry context cited by management
Executives highlighted other positive indicators even as they addressed investor concerns. Firms reported billions of dollars of new client commitments and pointed to a resurgence in mergers and acquisitions activity, developments analysts say should translate into added revenue and profit for alternative managers.
Blue Owl co-chief executive Marc Lipschultz, speaking at the firm’s earnings announcement, said simply: "The book is strong. We don’t see meaningful losses. We don’t see deterioration in performance." KKR co-CEO Scott Nuttall told investors his firm has been assessing each portfolio company for AI-related risk over the past two years, categorizing assets as opportunities, threats, or questions. He also noted that KKR holds $118 billion of dry powder - capital committed but not yet invested - and said, "It is multiples of any exposure we have that we have any AI-related anxiety about."
Apollo's Rowan added a measured endorsement of the software sector, saying it remains "an amazing" area to invest in, though he suggested current market valuations had shifted from previously elevated levels.
Investor reaction and market narrative
Despite the executives' efforts to reassure markets, investors have continued to pare positions in the shares of alternative asset managers. Analysts and market participants remain focused on two interrelated worries: the potential for AI to materially change demand for certain software assets, and the risk profile of private credit strategies highlighted late last year.
Karim Laib, an analyst at T. Rowe Price, said investors had been concerned last summer that alternative asset managers were financing too much of the AI buildout and could suffer if that expansion turned problematic. He described a shift in the narrative: "Now, the narrative is the alts will be losers because of AI’s transformative impact. The narrative has flipped but the outcome remains the same," Laib said. "That probably means the narrative is not right."
What managers say they will do
Management teams emphasized portfolio reviews, diversification and selective deployment of capital. Several firms pointed to their ongoing work to identify which investments are more likely to benefit from AI and which are at risk, and to position their balance sheets and investment pipelines accordingly. They also highlighted available capital and fee-generating opportunities tied to M&A and new client commitments.
Still, the market’s reaction suggests investors remain cautious, weighing near-term valuation swings in software alongside lingering questions about credit exposures in private lending strategies. The firms’ recent public defenses have moderated losses in the short term, but have not yet reversed broader declines that accumulated over several months.
Summary: Management teams at leading alternative asset managers have tried to reassure investors about limited software exposure and diversified portfolios amid a software-sector sell-off and prior private credit concerns, but share prices across the industry remain substantially lower over the last six months.