Apollo Sees Higher-for-Longer Rates Fueling AI Infrastructure Financing Boom

Apollo expects interest rates to remain higher for longer, while estimating only a 10%–20% chance of a recession over the next year. Consumer spending, inflation and AI infrastructure investment are supporting economic activity, though geopolitical and energy risks remain.

The firm views AI primarily as a large-scale financing opportunity, providing structured capital to investment-grade companies involved in digital infrastructure, energy, logistics and defense rather than betting on individual technology winners.

Apollo reported strong institutional fundraising, including a $12 billion first close for its Fund XI, and expects private-equity industry consolidation as smaller or overexpanded managers struggle to return capital. Its high-grade capital-solutions business has completed more than 200 transactions totaling roughly $150 billion.

Scott Kleinman, co-president of asset management at Apollo Global Management NYSE: APO, said the firm sees a “higher for longer” interest-rate environment continuing as consumer spending, persistent inflation and investment in artificial intelligence infrastructure support economic activity. Speaking at a Barclays conference, Kleinman said Apollo’s chief economist estimated the probability of a recession over the next 12 months at between 10% and 20%. He said geopolitical instability, trade policy questions, inflation and energy prices remain risks, but markets have continued to focus on consumer spending and the AI build-out.

Kleinman said Apollo is approaching AI primarily as a financing and structured-investment opportunity rather than making directional bets on which companies will capture the most value from the technology. “How do we sell the pickaxes to the gold miners as opposed to being the gold miners ourselves?” Kleinman said, describing the firm’s strategy of providing bespoke capital solutions to large investment-grade counterparties.

He said the capital needs tied to digital infrastructure, energy, industrial infrastructure, transportation, logistics and defense are occurring at a “once in a generation type scale.” In response, companies are increasingly using a mix of public equity, public bonds and private capital rather than relying on a single source of financing.

Asked about Apollo’s recently announced transactions with Broadcom and NVIDIA, Kleinman said the deals were highly structured and designed to be investment grade. He did not provide transaction-level financial details, but said such investments can be placed on Apollo’s balance sheet, client balance sheets and with syndication partners. Apollo expects a meaningful share of its transactions to remain on its own balance sheet, subject to issuer and sector concentration limits, he said.

Beyond AI, Kleinman pointed to opportunities in traditional and renewable energy, transportation and logistics infrastructure, and structured or hybrid corporate financing. He said Apollo is expanding its presence in Europe through investments in personnel and country offices. European companies are increasingly looking to private capital because local capital markets are less robust than those in the United States, Kleinman said. He cited transactions involving EDF, BP, Air France and RWE as examples of the firm’s activity in the region. Kleinman also highlighted Apollo’s high-grade capital solutions business, which prov...