One of the largest alternative asset managers on the planet is looking at its software portfolio and seeing a ticking clock. Apollo Global Management has spent roughly 18 months systematically reducing its exposure to software investments, driven by a straightforward concern: AI is about to eat a lot of these companies’ lunch.
Apollo has trimmed software holdings in its direct lending funds from approximately 20% of net assets in early 2025 to a target of under 10% by early 2026. That’s not a gentle rebalancing. That’s a firm with over half a trillion dollars in assets under management sprinting toward the exits on an entire sector.
The SaaS reckoning is already underway
Enterprise SaaS revenue multiples dropped 38% over a six-month period, according to the firm’s own analysis. The culprit is generative AI, which is rapidly commoditizing functions that SaaS companies used to charge premium prices for.
Co-President John Zito and other Apollo executives have been vocal about the risks facing what they call “generic” or “less-differentiated” SaaS products. If your software does something that a large language model can replicate or approximate, your moat just became a puddle.
