Apollo has changed its approach to AI investments: it will now be more cautious

The American investment firm Apollo Global Management intends to take a more cautious approach to financing artificial intelligence infrastructure. The company plans to prioritize more secure loans and limit the amount it invests in individual borrowers, despite growing demand for financing the construction of data centers and the purchase of AI chips.

“We know that in the future, society will need significantly more computing power, demand for chips will remain high, and AI capabilities will improve at an extremely rapid pace. But we don’t know how prices and the economics of this market will change,” Apollo President Jim Zelter said on November 3 in a call with analysts following the release of quarterly results, according to Bloomberg. Apollo intends to focus on secured lending and senior debt, as well as to impose strict limits on the amount of investment in individual borrowers, Zelter added. “[The company plans to] reduce risks, take a defensive stance, and prepare for the possibility of going on the offensive again,” he said.

Apollo CEO Mark Rowan attributed the decision to high asset valuations across various markets and heightened risks. “Fear of missing out (FOMO) is not an investment strategy. We are acting prudently and cautiously, especially when it comes to lending,” he said.

Apollo’s subsidiary, the insurance company Athene, announced on October 30 that, as of September 30, it had invested $12.9 billion in digital infrastructure. This amount includes $3.1 billion invested in SpaceX, $2.4 billion in Oracle, $2.3 billion in Meta Platforms, and $1.1 billion each in Anthropic and Broadcom. However, the figures do not include loans that Apollo has committed to provide but has not yet funded, Bloomberg noted.

Apollo itself increased its new loan volume to $114 billion in the third quarter, more than 50% higher than in the same period last year. However, net income turned into a loss amid rising interest rates, according to Bloomberg.

Apollo's stock fell 4.9% during trading on November 3, and its losses since the beginning of the year total about 21%.

Major asset management firms specializing in alternative investments, including Apollo and Blackstone, are actively involved in financing the development of AI infrastructure. Last week, Apollo signed a $40 billion financing agreement with SpaceX to purchase AI chips. Earlier this year, the company, together with Blackstone, finalized a $35 billion deal to expand Anthropic’s AI infrastructure.

This article was AI-translated and verified by a human editor