Diana: What are some of the current themes that you're focused on today?

Rob: The reality is we're probably spending about three quarters of our time on AI just because it's touching so many different parts of the market. I talk about the infrastructure side of things, which is creating deployment opportunities for Apollo broadly across our businesses. And then from a more defensive perspective, it's trying to get ahead of the disruption narratives that are having pretty profound impacts on how risk is being priced in certain industries.

AI is the theme, but there's multiple sub-themes that sit below that. We're doing a lot of work right now on business services, which has a lot of knowledge-based sub-sectors. And those are the types of sectors that investors are becoming increasingly most concerned about.

Anything that is asset-light, that is based on knowledge workers, is being tagged with AI disruption risk. Now, I would argue that the market is being very blunt in how they're applying that lens. And so what we're trying to do is really sift through and figure out where the narrative is relevant, where it isn't, where there's opportunity.

Alex: You've been studying AI for quite a while. We've been ahead of it and have pre-positioned portfolios away from the risk factors. I'm curious of your thoughts around the valuations. That's the more acute thing that's happening currently. Because I think some people are like, well, AI maybe it's one year or three years, five years, but actually the risk that's forming in our view is it's now.

Rob: You're touching upon an important point, which is if you look at the top five or six enterprise SaaS companies that are publicly traded, they've lost between 35 and 60 percent of their value over the last 12 months.

I like to joke—if you were in a cave for the past year and you emerged yesterday and you didn't read the newspaper, and I showed you the financials of these companies and I showed you the stock price from a year ago and asked you to predict where they were trading today, you would not guess down 40 to 60%.

You're not yet seeing it in the numbers. But that's not what the market's saying. The market is not concerned about next quarter or the third quarter or the fourth quarter. They're concerned about 2027, 2028 numbers.

That's what's getting priced, and that uncertainty about what the future state is going to look like is a very broad range of outcomes. And so you've seen multiples essentially get cut in half in the public equity markets.

Alex: And then many credit managers are defending their exposures and saying, “Well, our loan-to-value is 30%. We don't really see the risk in the numbers.” It feels like some are driving looking in the rearview mirror instead of through the windshield. Help us unpack that.

Rob: If you were to mark to market what was a 50% LTV loan 12 months ago, and be intellectually honest, given that multiples have broadly been cut in half, it's now effectively a 100% LTV loan.

Maybe that's temporary. I don't think that's the case. The certainty that the industry enjoyed, which is why it was such an attractive industry for private equity deployment, is gone, at least for the foreseeable future.

In some ways this could become a self-fulfilling prophecy. If the market is worried about future valuations, if LTVs are optically much higher than they were 3, 6, 12 months ago, if you look at the maturity schedule for many of these companies, you're going to have over $100 billion of software-related debt come due over the next two years.

If this narrative persists, if these valuations persist, it's going to be very challenging for some of these companies to cost-effectively address those maturities, which could lead to defaults or liability management activity as owners try to capture discount and maintain optionality.

Q&A is edited for clarity

This interview is part of the "Inside Apollo's Private Credit Platform" series, featuring perspectives from Apollo partners. View all interviews.