Bloomberg Talks – Apollo Global Management President Jim Zelter on Software Exposure & US Investment in Japan
Episode Date: February 18, 2026
Host: Bloomberg (John & team)
Guest: Jim Zelter, President, Apollo Global Management

Episode Overview

This episode features Apollo Global Management President Jim Zelter in a wide-ranging conversation about Apollo’s unique approach to the software sector, the evolution of private credit, global investment strategies (with a focus on Japan), and big-picture trends in finance, technology, and employment. Zelter discusses why Apollo has maintained a conservative position in the software space compared to competitors, the firm’s investment philosophy amidst market disruptions, and insights from a recent Apollo partner trip to Japan. The discussion also unpacks the impact of artificial intelligence (AI), fiscal vs. monetary policy, and the rise of the so-called “K economy,” touching on impacts to jobs and economic growth.

Key Discussion Points & Insights

1. Apollo’s Conservative Approach to Software Investments

• Leaner Exposure:
  • Apollo has intentionally kept a limited software sector presence in its investment portfolio, especially compared to peers.
• Rationale:
  • Focused on risk and value discipline, especially in non-investment grade markets where software, tech, and health tech comprise ~40%.
  • Cites potential for business model disruption as a reason for caution.
  • Maintains a higher focus on investment grade (IG) private credit.
• Quote:
  • "[It] wasn't that we were smarter, it’s just that when you have a disciplined approach on value… there’s a tremendous amount of wonderful companies out there. But when we think about equity at the bottom of a levered balance sheet… there’s just risks that we thought were not prudent for our style of investing." (Jim Zelter, 02:00)

2. Private Credit’s Evolution and Market Reactions

• Marketplace Role:
  • Apollo has benefited from the major growth of private credit and the broader market’s evolution over the last 3-5 years.
  • Emphasis on Apollo’s resilience and readiness for a possible upcoming credit cycle, drawing lessons from 2007-09.
• Stock Volatility:
  • Market uncertainty has caused some Apollo stock selloff, driven by larger sector questions not specific concerns about Apollo.
• Global Perspective:
  • Recently led 200 Apollo partners to Japan, emphasizing international strategic priorities (retirement solutions, global transitions).
• Quote:
  • "There’s nothing fundamentally that investors have told us that there’s concern about our company… but there [are] concerns about the growth of private credit in aggregate." (Jim Zelter, 03:41)
• Quote on Global Vision:
  • "When you think about the things that we’re involved with—retirement solutions, helping investment grade companies evolve, global growth of economies that are in transition periods—Japan was an amazing place for us to get that strategy." (Jim Zelter, 04:51)

3. Differentiating Investment Strategies in Alternative Asset Management

• Dispersion in Returns:
  • Different alternative asset managers are taking divergent strategies (credit, real estate, Asian equity).
  • The upcoming credit cycle will separate the resilient from the vulnerable.
• AI and Productivity:
  • Industry-wide focus on AI and its second, third, and fourth-order impacts (on capital returns, employment, productivity).
• Policy Transition Needs:
  • Zelter highlights a historic overreliance on monetary policy; calls for increased fiscal policy focus to address retirement and budgetary challenges.
• Quote:
  • "This is a time for a lot of fiscal activity to be really dealt with… monetary policy can only do so much." (Jim Zelter, 07:11)

4. Demand for Investment Grade Credit Amid Changing Opportunities

• Long View on Credit:
  • Strong recent bank earnings reflect deep U.S. capital market health.
  • Investment grade credit is seeing voracious global demand, even as non-IG (sponsor-led) faces turbulence.
• Asset Allocation Trends:
  • Investors considering expanding outside IG to asset-based finance; returns expectations moderating as spreads tighten.
• Quote:
  • "The demands on credit and the demands for capital to build out the vision of what they want to do is voracious… there’s voracious demand for that around the globe." (Jim Zelter, 09:28)

5. “Pebbles vs. Boulders” – Focusing on What Matters

• Strategic Focus:
  • For a ~$930 billion AUM firm, marginal gains (“pebbles”) in the non-IG software sector don’t move the needle compared to transformative opportunities (“boulders”) like global retirement solutions.
• Quote:
  • "For us to really have an impact… we need to focus on large river opportunities. And when I think about… the non-investment grade world, it’s a… $400 billion opportunity set… I’m thinking about how do I become a retirement solutions provider in Australia and Japan. Those are boulders…" (Jim Zelter, 10:20)

6. US Investment in Japan and Macroeconomic Agreements

• Investment Underestimation:
  • U.S. government signed new major agreements with Japan and others in Asia, and these are expected to drive significant future capital deployment.
• Strong US Economic Fundamentals:
  • Pro-business administration, M&A/capex booms anchor economic strength.
• Risks & Caveats:
  • Closest risks are on shifting consumer sentiment, which is not yet visible in hard data.
• Quote:
  • "You have an administration that is very pro business… administration is doing a strong job by this agreement, plus the four or five that are behind it." (Jim Zelter, 12:01)

7. AI, Labor Markets, and the Emerging “K Economy”

• K Economy Defined:
  • Top of the “K”: Companies that win access to capital, data, energy—likely to thrive.
  • Bottom of the “K”: Companies afflicted by margin pressure and resource limitations.
• Uncertainty About Job Growth:
  • Long-term productivity and employment impacts from AI/capital investment remain unknown.
  • No major hiring strategy shifts yet at portfolio companies.
• Quote:
  • "I don’t think the second and third derivative of the long-term impact of productivity and actual employment and then consumer spending… that’s really in the marketplace." (Jim Zelter, 12:58)
• Quote on Labor Market Change:
  • "I don’t think you’ve seen a broad-based evolutionary strategy in hiring across our portfolio companies… I still think it’s quite a bit early." (Jim Zelter, 14:14)

8. Policy and Political Uncertainty

• AI & Regulation:
  • US reluctant to regulate technology for fear of falling behind China; anticipates reactive rather than proactive policy change.
• Political Risks:
  • Unknowns around upcoming elections and legislative execution on financial issues like credit card interest caps.
• Quote:
  • "Right now it seems like there’s a constraint where Washington doesn’t want to fall behind China so they don’t want to regulate a lot of the technology." (Bloomberg Host, 15:36)

Notable Quotes & Memorable Moments

• On Apollo’s Strategy:
  • “When you have a disciplined approach on value… there’s just risks that we thought were not prudent for our style of investing.” (Jim Zelter, 02:53)
• On Market Cycles:
  • “The great thing about capitalism is if there’s concerns, the market reacts really, really quickly.” (Jim Zelter, 03:53)
• On Fiscal vs Monetary Policy:
  • “You need to have good fiscal policy, really be thoughtful about long term retirement solutions, long term budget issues…” (Jim Zelter, 07:28)
• On Opportunity Focus:
  • “The software, it’s a good conversation… but I don’t think it’ll be the central conversation on this show.” (Jim Zelter, 10:54)
• On Labor & AI:
  • “I think there’s the immediate euphoria when one… tries out these applications… But I don’t think you’ve seen broad-based evolutionary strategy in hiring across our portfolio companies.” (Jim Zelter, 14:14)

Timestamps of Key Segments

• 01:20 – Introduction; framing Apollo’s software exposure
• 02:00 – Jim Zelter on Apollo’s cautious approach to software investment
• 03:41 – Discussing Apollo’s stock performance and investor sentiment
• 05:52 – The role of cycles, market dispersion, and alternative asset manager strategies
• 08:25 – Private credit, investment grade opportunities, and global capital markets
• 10:09 – “Pebbles versus boulders” strategy and Apollo’s prioritization
• 11:26 – US-Japan investment climate and new agreements
• 12:39 – Impact of investments on GDP, job growth, and the rise of the “K economy”
• 13:44 – AI’s labor impact and early-stage implications for hiring
• 15:36 – Policy outlook, political and regulatory risk
• 15:56 – Closing thoughts on markets’ evolution and Apollo’s focus

Summary

This conversation with Jim Zelter reveals Apollo Global Management’s disciplined, risk-focused investing style, especially regarding the software sector, and its strategic emphasis on “bolder” long-term global and retirement solutions. Zelter is optimistic about US capital markets, sees significant global investment traction (notably in Japan), and is circumspect about both the impacts of technology/AI on employment and the effectiveness of future policy responses. The episode provides a nuanced look at current finance industry dynamics—from private credit and asset allocation to macroeconomic outlooks and the socioeconomic implications of technological evolution.