Apollo screens all software investments for AI disruption risk

Apollo Global Management has begun checking every software investment for the risk of disintegration caused by AI. Asset managers are trying to reassure investors concerned that rapid progress in artificial intelligence could make entire business sectors obsolete in a short timeframe.

When AI becomes a portfolio threat

Investors have long known: technology can reformat an industry in just a few years. But AI is not an ordinary wave like cloud computing or mobile software. Artificial intelligence can take on tasks that previously seemed protected from automation — code analysis, strategic planning, even consulting. Software is particularly vulnerable. If AI learns to write code faster and more reliably than developers, or independently generate and test bugs, entire categories of software companies could lose value in a year. Not in a decade — in a year. This prospect is what keeps investors on edge.

Apollo Global Management has acknowledged that this risk is not a hypothesis for the future, but a working scenario for today. That is why every new software investment now undergoes mandatory checks for AI resistance. And this decision by one of the largest funds signals to the market: soon such screening will become the standard for the entire industry.

Which companies are at risk

Some categories of software are more vulnerable to displacement by AI than others:

• Data analysis and reporting — AI can already extract insights from big data and visualize results
• Customer service platforms — chatbots and automated systems are displacing support agents faster than expected
• Basic coding tools — autocomplete, auto-generation, and refactoring have become standard
• Document management and text processing — LLMs handle this better than narrow specialized systems
• Analytics and forecasting — generative models learn faster than platforms are updated

Apollo has calculated that in these categories, profitability could drop if not tomorrow, then within 18-24 months. Investors don't like this, because it means: even a profitable company today could become unprofitable if it doesn't adapt to AI challenges.

How investor pressure is changing the market

A wave of concerns is moving from bottom to top. Limited partners — pension funds, universities, wealthy individuals who invest in funds — are demanding from managers proof that their portfolio won't collapse with the next wave of AI progress. This creates a cascade of checks throughout the entire chain. A fund asks portfolio company managers to prove they are diversified from AI risks. Managers begin filtering out vulnerable companies at the first revaluation. It's like a domino effect: one major investor took a cautious approach, and the rest are rushing to follow.

"Every investor is now asking: how resilient is this to AI?"

This reflects the mood at venture and PE meetings in Silicon Valley and on Wall Street. The risk of AI displacement has moved from conversations about the future into today's financial models.

What this means for the market

For software companies, this is a new reality: they must prove not just that they are profitable and growing, but that they are protected from AI displacement. This means investing in unique components that are hard to automate — specialized knowledge, niche markets, deep customer relationships.

For investors, this is an acknowledgment that technological risk no longer resembles the familiar risk of competition or demand collapse. AI can rewrite the competitive equation in months. And instead of just hoping for the best, funds are now actively screening their portfolio, filtering out obviously vulnerable companies.

The industry is moving from the question "can AI do this?" to "when will AI do this and what will it cost our investments?" Apollo has bet that it knows the answer, and is now updating its investment process in accordance with this new reality.