Software Stocks Face Grim Outlook Amid Intensifying AI Disruption
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 19 2026
0mins
Source: Newsfilter
- Uncertain Future for Software Stocks: David Sambur, Co-Head of Private Equity at Apollo, stated that the selloff in software stocks is far from over, as investors question the sector's revenue and gross margin models amid intensifying AI competition.
- Accelerated AI Impact: Sambur noted that the pace of displacement caused by AI is the fastest he has ever witnessed in his career, creating unprecedented competitive pressure for software companies, particularly against rivals like Anthropic and OpenAI.
- Limited Market Rebound: Although the IGV Software ETF rebounded about 3% in March, it remains down 20% for the year, and Sambur believes that this market recovery does not alter the fundamental issues facing software companies, especially regarding revenue models and gross margins.
- Buybacks and Innovation Risks: With companies like Intuit, Hubspot, and Salesforce announcing share repurchases, Sambur pointed out that these buybacks could be seen as a signal of companies waving the white flag on innovation, as they reduce available capital for future mergers and acquisitions, impacting long-term industry growth.
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Analyst Views on APO
Wall Street analysts forecast APO stock price to rise
11 Analyst Rating
10 Buy
1 Hold
0 Sell
Strong Buy
Current: 128.760
Low
136.00
Averages
164.45
High
182.00
Current: 128.760
Low
136.00
Averages
164.45
High
182.00
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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- Industry Consolidation Example: ALTEMIRA emerged as a successful case of sponsor-led consolidation in Japan's industrial sector by integrating Showa Denko and Mitsubishi Materials' aluminum businesses, showcasing Apollo's execution capabilities in complex carve-out transactions.
- Unique Recycling Ecosystem: ALTEMIRA operates one of the world's few vertically integrated closed-loop aluminum recycling ecosystems, covering the entire process from used beverage can collection to processing and manufacturing, enhancing its competitive edge in the market.
- Strategic Investment Partner: Apollo's investment in ALTEMIRA highlights its role as a trusted partner to Japan's leading corporations, providing differentiated solutions to help businesses achieve strategic objectives, particularly in sectors historically challenging for outside capital to penetrate.
See More
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- Investment Strategy: The fund focuses on acquiring and repositioning high-quality logistics real estate assets in supply-constrained U.S. infill and global gateway markets, creating operational value through leasing, asset management, and targeted capital improvements to capitalize on long-term demand drivers in the industrial sector.
- Market Opportunities: BLV II's investment strategy emphasizes acquiring well-located assets at attractive prices in markets with strong long-term demand fundamentals, expected to benefit from supply chain modernization and e-commerce growth, thereby enhancing its competitive position.
- Team Strength: Jay Cornforth, CEO of Bridge, stated that the successful close of BLV II reflects the strength of the team and the resilience of the logistics sector, indicating that disciplined investing in high-quality industrial real estate continues to present compelling opportunities.
See More
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- Oil Price Surge: WTI crude oil prices rose over 2% to a 1.5-week high following the US interception of Iranian missiles and drones, heightening concerns about Middle Eastern stability and potentially affecting global supply chains and inflation expectations.
- Strong Employment Data: The US May ADP employment change increased by 122,000, surpassing expectations of 120,000, signaling signs of economic recovery that could support the stock market, although overall market performance remains influenced by other factors.
- Divergent Tech Stock Performance: While Marvell Technology rose over 3%, software and cybersecurity stocks faced significant declines, with Datadog and IBM dropping more than 6%, reflecting a lack of confidence in the tech sector despite some positive developments.
See More
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- Apollo Global Management's Growth Potential: Apollo reported FY 2025 revenue of $32.5 billion, a 22.7% increase, with net income of approximately $3.5 billion, demonstrating success in integrating retirement income solutions through its subsidiary Athene, enhancing its appeal in the long-term investment market.
- Risks and Challenges: Blackstone faces risks related to revenue volatility and dependence on third-party fundraising, while Apollo must navigate credit rating risks associated with Athene and complex global regulations, factors that could impact future growth potential for both firms.
- Valuation Comparison and Investment Recommendation: Apollo appears more affordable based on future earnings estimates, with a forward P/E of 14.2x compared to Blackstone's 19.5x, and Apollo's faster asset management growth rate makes it a suitable choice for investors seeking long-term returns.
See More
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- Market Decline: The S&P 500 index fell by 0.40%, the Dow Jones Industrial Average dropped by 0.74%, and the Nasdaq 100 decreased by 0.08%, indicating market pressure due to escalating geopolitical tensions, particularly between the US and Iran.
- Rising Oil Prices: The WTI crude oil price surged over 1% to a 1.5-week high amid US-Iran clashes, which could further elevate inflation expectations and impact Federal Reserve monetary policy decisions.
- Strong Employment Data: The US May ADP employment change rose by 122,000, exceeding expectations of 120,000, indicating signs of economic recovery that may support the stock market, although the overall market remains weighed down by declines in software and cybersecurity stocks.
- Divergent Tech Stock Performance: Despite overall market pressure, Marvell Technology's stock rose over 7% following Nvidia CEO's prediction that it would reach a $1 trillion valuation, highlighting the supportive role of AI infrastructure spending on technology stocks.
See More
US Stock Market Under Pressure with Mixed Tech Performance
- Market Decline: The S&P 500 index fell by 0.57%, the Dow Jones Industrial Average dropped by 0.58%, and the Nasdaq 100 decreased by 0.60%, indicating market vulnerability amid escalating US-Iran tensions, which negatively impacted investor sentiment.
- Mixed Tech Performance: While Marvell Technology surged over 6%, software companies like Atlassian and Datadog saw declines exceeding 7%, highlighting significant internal divergence within the tech sector that could affect overall market stability.
- Supportive Employment Data: The May ADP employment change rose by 122,000, surpassing expectations of 120,000 and marking the largest increase in 16 months, indicating resilience in the US labor market that may provide support for stocks.
- Mortgage Applications Decline: For the week ending May 29, US MBA mortgage applications fell by 2.5%, with the purchase mortgage sub-index down 2.9%, reflecting pressure from rising interest rates on the housing market, which could impact future consumer spending.
See More
