Apollo Bets Big: How AI is About to Shatter the Software Industry’s Foundation

Forget incremental updates—this is a demolition job. Apollo's latest strategic pivot signals a seismic shift, placing its chips on artificial intelligence to dismantle and rebuild the very business of building software.

The Code-Maker, Unmade

Traditional software development, with its armies of developers, endless sprints, and bloated budgets, is staring down the barrel. Apollo's vision? AI agents that don't just assist programmers but bypass them entirely—generating, testing, and deploying complex code at a pace and cost that human teams can't match. It cuts project timelines from quarters to weeks and slashes the most significant line item: labor.

From Assembly Line to Autopilot

The model is shifting from craft to automation. Think of it as moving from hand-stitching garments to programming a textile mill. The value migrates from the act of creation to the design and oversight of the systems that create. This isn't about making developers slightly more efficient; it's about redefining what a 'developer' even is.

The New Economics of 'Build'

The financial implications are brutal and beautiful. Capital once locked in multi-year development cycles gets freed. Innovation cycles accelerate from glacial to real-time. Startups can prototype and pivot with the agility of a thought. Of course, the venture capital crowd is already salivating—nothing gets a check written faster than the promise of disrupting a multi-trillion-dollar market, even if half their previous 'disruptive' bets now litter the graveyard of forgotten apps.

Apollo isn't just predicting a trend; it's funding the wrecking ball. The software industry is about to learn the hard way that the most disruptive product isn't a better app—it's the machine that builds the app itself.

Apollo warns that AI could harm the enterprise software industry

Apollo claims that AI poses risks to enterprise software, the largest target for private capital over the past decade. Other private lenders have also argued similarly, stating that software stands out as one of the most exposed sectors to AI, as the technology can automate many functions currently handled by coding tools, customer support software, and routine financial systems.

Nonetheless, Apollo’s short bets were just a small slice of its $700 billion credit book—less than 1%—according to a person familiar with the matter, with some of the funds used as hedges.

However, the software loans that Apollo bet against fell in value at times this year, but they’re all now trading above 80 cents on the dollar, halting concerns about near-term trouble. Though since the early 2010s, buyout specialists have borrowed hundreds of billions to acquire software firms, as lenders increasingly value recurring revenue and strong margins. 

Apollo still recognises that AI could benefit software companies, but its top executives have decided to cut exposure, preferring not to take directional industry positions. Marc Rowan, at a recent conference, even commented,  “I don’t know whether that’s going to be enterprise software, which could […] benefit or be destroyed by this. As a lender, I’m not sure I want to be there to find out.” 

Apollo is working to push software exposure across its credit portfolios below 10%.

Apollo has steadily reduced its exposure by lending to the sector throughout the year. At the start of 2025, roughly a fifth of Apollo’s private credit funds were tied to software groups, but that exposure has now been almost halved, Rowan said in closed-door investor meetings at a Goldman Sachs conference on Wednesday, a source in attendance said.

According to Rowan, the firm aims for software exposure across its credit funds to fall below 10% of net assets. It has been internally assessing which companies may be most vulnerable to AI disruption, and many other investors share similar concerns.

At an FT conference in October, Blackstone’s president, Jonathan Gray, warned that investors were underestimating the potential for disruption from technology, stating that he has challenged dealmakers to prominently quantify AI risks in their investment memos and identify specific companies as particularly vulnerable. 

Gray commented, “We’ve told our credit and equity teams: address AI on the first pages of your investment memos. If you think about rules-based businesses — legal, accounting, transaction and claims processing — this is going to be profound.” 

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