A Value-Oriented Approach to AI Investing
We believe investors can participate in the growth of artificial intelligence while protecting themselves against downside risks by adopting a flexible approach that seeks some of the best relative risk-reward opportunities in the data centers, energy systems, cooling technologies and digital infrastructure platforms that run the AI economy.
The rapid growth of AI hyperscalers has driven up valuations and ratcheted up concentration levels to potentially dangerous levels across markets and within portfolios. However, underneath that exuberance is what we continue to believe is a truly historic investment opportunity. AI is transforming the world, and we are still in the early stages of the buildout of the physical and digital ecosystem that will support it. The question is: how can investors participate in that growth without taking on outsized risks?
We believe an unconstrained approach focusing on the foundational elements of the AI ecosystem and utilizing a mix of private market strategies and deal structures can allow investors to maintain and even expand their exposures to AI, while building more stable and durable portfolios that are less susceptible to short-term market volatility. In this article, we will break down the principles of this “value-oriented” approach to AI and present case study examples of how that strategy has successfully been put into practice by Apollo on behalf of its clients and investors.