Apollo Global Warned of $2.5 Trillion Private Credit Defaults in AI Crash Scenario
A pre-mortem scenario warns that runaway AI-driven productivity gains could trigger mass defaults in the $2.5 trillion private credit market, severely impacting Apollo Global Management's insurance arm. The report models an S&P 500 crash to 3,500 by 2028 as displaced workers collapse consumer demand.
1. Report Outlines AI-Driven Market Collapse
The pre-mortem scenario projects the S&P 500 plunging from near 8,000 in 2026 to 3,500 by 2028 as rampant AI-driven productivity gains trigger a deflationary spiral.
2. Impact on Apollo's Private Credit Portfolio
The model forecasts mass defaults in the $2.5 trillion private credit market, with Apollo Global Management's insurance arm particularly exposed to software loan losses held in its credit funds.
3. Consumer Demand Shock Mechanism
As companies replace white-collar roles with AI agents, displaced workers reduce spending, creating “Ghost GDP” that undermines real economic circulation and strains asset managers reliant on stable consumer markets.
4. Apollo Share Reaction and Risk Assessment
Shares of Apollo Global Management fell over 4% on the report's release, highlighting investor concern over potential credit losses and prompting reevaluation of risk in private credit strategies.