John Zito on Software, AI Disruption, and Putting Capital to Work

Apollo Co-President John Zito recently joined CNBC's Squawk on the Street to discuss AI-driven disruption in the software sector, Apollo's disciplined approach to capital deployment amid a volatile technology cycle, and opportunity in the current environment.

In a recent interview on CNBC, Apollo Asset Management Co-President John Zito addressed a central tension in software investing today: AI disruption is accelerating, and investors are working to distinguish durable businesses from those whose valuations may not hold up. His view is not that software will disappear; in fact, software will likely be used more than ever. What’s changing is the fundamental question of what the market will pay for it.

From 2018 to 2022, software represented 30% to 40% of private equity activity. Near-perfect retention rates, high growth trajectories, and a low perceived probability of disruption made software businesses attractive targets for acquisitions at premium multiples. Zito suggests that the overallocation of capital into a single sector during that period may have presented a warning sign, one where consequences are now becoming more visible. Apollo has been underweight the sector for roughly 18 months, a deliberate approach demonstrating caution toward a cycle that is still in its early stages.

Strong near-term performance, Zito noted, is not always a reliable indicator of long-term durability. When the iPhone launched in 2007, BlackBerry revenues were still growing and didn’t peak until 2011. It was another five years before the company exited the smartphone market. Similarly, revenues at many software businesses still look relatively stable today, but that may not fully capture structural risks that could emerge over time. The marginal cost of producing software is moving toward zero, a dynamic that could reshape margin profiles and valuation frameworks.

Outcomes are likely to vary widely across companies, and we expect that dispersion will be the defining feature of the next phase. Businesses with proprietary data, genuine competitive moats, and management teams capable of adapting quickly will be best positioned. Those whose models are more commoditized or lack differentiation will likely face pressure.

Apollo's capital deployment reflects this view. We continue to focus on investment grade, senior lending against hard collateral and financing leading businesses benefitting from long-term secular tailwinds. For credit investors, we believe structure, seniority and downside protection matter more than ever. 

The interview originally aired on CNBC's Squawk on the Street on February 11, 2026.