AI Trade Sentiment Reverses, Four Major Industries Hit Hard
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: Benzinga
- Software Sector Hit: The iShares Tech-Expanded Software Sector ETF (NYSE:IGV) has plummeted nearly 20% year-to-date, making it the worst-performing industry, as fears mount that AI tools could disintermediate traditional software providers, causing forward P/E ratios for application software to drop from 35.3 to 23.7 and systems software from 35.5 to 23.3, reflecting market concerns over future earnings durability.
- Brokerage Pressure: Investment banks and brokerage firms are under pressure following the rollout of AI tools by fintech firm Altruist, with forward P/E ratios declining from 24.7 to 15.9, as the market fears that AI could replace traditional advisors in the future, leading to long-term margin compression.
- Insurance Broker Anxiety: Insurance brokers are facing disruption due to the integration of AI-driven tools, with the S&P Insurance Brokers industry index down 4% year-to-date; while the insurance sector remains relationship-driven, there are concerns that AI could erode commissions, impacting brokers' income stability.
- Asset Management Damage: Alternative asset managers are indirectly affected by significant exposure to private software companies, with many large firms down double digits year-to-date, as declining public software valuations raise concerns about their private portfolios, shrinking exit opportunities.
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Analyst Views on APO
Wall Street analysts forecast APO stock price to rise
13 Analyst Rating
12 Buy
1 Hold
0 Sell
Strong Buy
Current: 125.370
Low
136.00
Averages
162.77
High
186.00
Current: 125.370
Low
136.00
Averages
162.77
High
186.00
About APO
Apollo Global Management, Inc. is a global alternative asset manager and a retirement services provider. It operates through three segments: Asset Management, Retirement Services and Principal Investing. The Asset Management segment focuses on three investing strategies: yield, hybrid, and equity. These strategies reflect the range of investment capabilities across its platform based on relative risk and return. The Retirement Services business is conducted by Athene Holding Ltd (Athene), a financial services company that specializes in issuing, reinsuring, and acquiring retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. Athene product lines include annuities and funding agreements. The Principal Investing segment includes realized performance fee income, realized investment income from its balance sheet investments, and certain allocable expenses related to corporate functions supporting the entire company.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Brokerage Pressure: Investment banks and brokerage firms are under pressure following the rollout of AI tools by fintech firm Altruist, with forward P/E ratios declining from 24.7 to 15.9, as the market fears that AI could replace traditional advisors in the future, leading to long-term margin compression.
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- Management Transition: Schulte Hospitality Group will assume operations of Sotherly's 10 full-service hotels and its single condo-hotel management agreement, leveraging its extensive industry experience to enhance guest experiences and drive business growth.
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See More
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- Teva's Positive Outlook: Goldman Sachs analysts assert that despite Teva's stock doubling over the past year, its current valuation remains attractive, and the company is on a rapidly ascending earnings trajectory, urging investors to remain calm and accumulate shares.
- Philip Morris's Successful Transformation: Goldman highlights that Philip Morris is transforming into a faster-growing and more profitable business, with shares up nearly 18% year-to-date, indicating significant upside potential as it delivers strong earnings growth.
- S&P Global's Strong Positioning: Although S&P Global's stock has declined 22% this year, analysts believe its strong AI positioning and durable long-term earnings power will drive organic revenue growth, with a revised price target lowered from $555 to $498.
- Nvidia's Market Focus: Goldman expects Nvidia to report strong results in its upcoming earnings, with investors keenly watching for insights into 2027 visibility and competitive dynamics, despite high expectations for outperformance.
See More
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- Rising Default Risks: UBS analysts project that corporate loan defaults could reach between $75 billion and $120 billion over the next year, particularly impacting software and data services firms owned by private equity, thereby exacerbating instability in the credit markets.
- Delayed Market Reaction: Analysts note that the market has been slow to respond to the rapid advancements in AI technology, with many investors failing to timely recalibrate their views on credit evaluations, leading to an underestimation of credit risks that could trigger broader credit tightening.
- Potential Credit Crisis: In a worst-case scenario, default rates could double the baseline estimates, resulting in a sharp decline in liquidity in the credit markets, creating what is known as a 'tail risk' that could severely impact many companies.
- Industry Classification Impact: Mish categorizes companies into three groups, indicating that creators of foundational large language models like Anthropic and OpenAI are likely to emerge as winners, while high-debt private equity-owned software firms face greater survival pressures and may be eliminated in the AI transformation.
See More
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- Investigation Launched: Pomerantz LLP is investigating on behalf of Apollo Global Management investors regarding potential securities fraud or other unlawful business practices, highlighting serious concerns about corporate governance and compliance.
- Executive Discussions Exposed: The Financial Times reported that Apollo executives, including CEO Marc Rowan, held extensive discussions about tax arrangements with Jeffrey Epstein during the 2010s, despite the firm previously claiming no business dealings with him, which could significantly damage the company's reputation.
- Stock Price Decline: Following this news, Apollo's stock price fell by $7.69, or 5.72%, closing at $126.85 per share on February 3, 2026, reflecting market concerns over the company's governance issues.
- Potential Legal Consequences: As a prominent securities class action firm, Pomerantz LLP's investigation may lead to substantial damages and legal liabilities for Apollo, further impacting investor confidence and the company's future market performance.
See More
AI Trade Sentiment Reverses, Four Major Industries Hit Hard
- Software Sector Hit: The iShares Tech-Expanded Software Sector ETF (NYSE:IGV) has plummeted nearly 20% year-to-date, making it the worst-performing industry, as fears mount that AI tools could disintermediate traditional software providers, causing forward P/E ratios for application software to drop from 35.3 to 23.7 and systems software from 35.5 to 23.3, reflecting market concerns over future earnings durability.
- Brokerage Pressure: Investment banks and brokerage firms are under pressure following the rollout of AI tools by fintech firm Altruist, with forward P/E ratios declining from 24.7 to 15.9, as the market fears that AI could replace traditional advisors in the future, leading to long-term margin compression.
- Insurance Broker Anxiety: Insurance brokers are facing disruption due to the integration of AI-driven tools, with the S&P Insurance Brokers industry index down 4% year-to-date; while the insurance sector remains relationship-driven, there are concerns that AI could erode commissions, impacting brokers' income stability.
- Asset Management Damage: Alternative asset managers are indirectly affected by significant exposure to private software companies, with many large firms down double digits year-to-date, as declining public software valuations raise concerns about their private portfolios, shrinking exit opportunities.
See More
Sotherly Hotels Acquired by KWHP and Ascendant in Strategic Merger
- Merger Completion: KWHP and Ascendant successfully acquired Sotherly Hotels through their joint venture KW Kingfisher LLC at a price of $2.25 per share, with shareholder approval obtained on January 22, 2026, marking a strategic expansion into the Southeastern U.S. market.
- Operational Transition: Schulte Hospitality Group will take over operations of Sotherly's 10 full-service hotels and a condo-hotel management agreement, enhancing its influence in high-end hotel management and aligning management efforts through co-investment with the investor group.
- Market Potential: Sotherly owns 2,786 hotel rooms across ten full-service hotels in seven states, and the acquisition will significantly bolster KWHP and Ascendant's high-quality hospitality portfolio in the Southeast, catering to the growing travel demand.
- Strategic Collaboration: This acquisition represents a crucial step in KWHP and Ascendant's execution of their high-quality asset strategy, aiming to enhance guest experiences and drive growth for these upscale assets through resource integration and expertise sharing.
See More
Sotherly Hotels Acquired by KWHP and Ascendant in Strategic Merger
- Merger Completion: KWHP and Ascendant successfully acquired Sotherly Hotels through their joint venture KW Kingfisher at a cash price of $2.25 per share, significantly enhancing both firms' hotel investment portfolios in the Southeastern U.S. markets.
- Shareholder Approval: Sotherly's shareholders unanimously approved the acquisition at a special meeting on January 22, 2026, indicating strong support for the strategic direction post-merger, which is expected to improve overall operational efficiency.
- Management Transition: Schulte Hospitality Group will assume operations of Sotherly's 10 full-service hotels and its single condo-hotel management agreement, leveraging its extensive industry experience to enhance guest experiences and drive business growth.
- Financing Support: Apollo and Ascendant provided debt financing commitments for the transaction, ensuring adequate funding for the joint venture and further solidifying KWHP and Ascendant's market position in high-quality hotel assets.
See More
