Apollo flags systemic risk from delayed AI profits as Q2 direct-lending plunges
APO•U.S. direct-lending deals fell sharply in Q2 as fund-raising by private credit firms rebounded significantly, highlighting a mismatch between capital supply and deal flow. Apollo’s chief economist Sløk warns that delayed AI profit rollouts at Google, Amazon and Microsoft could pose systemic market risks.
1. Q2 Direct-Lending Slump
U.S. direct-lending activity by private credit firms fell sharply in the second quarter, despite a rebound in fund-raising that saw firms amass significant new capital. The contrast underscores a shortage of deal flow to absorb the inflow of dry powder and could pressure returns in the sector.
2. Apollo Warns of AI Profit Delays
Apollo’s chief economist Sløk cautioned that if major hyperscalers such as Google, Amazon and Microsoft experience delays in realizing AI-driven profits, wider market valuations could be at risk. He highlighted that postponements in AI rollouts or revenue recognition could trigger volatility across equity and credit markets.
