Apollo, Ares, and Owl Rock Positioned for AI Financing Boom, Raymond James Says

A trio of major alternative asset managers are poised to benefit from the significant capital required to build out artificial intelligence infrastructure, according to a new analysis from Raymond James. The investment bank noted on Monday that Apollo Global Management (NYSE:APO), Ares Management (NYSE:ARES), and Owl Rock Capital (NYSE:OWL) are strategically positioned to finance key areas of the AI ecosystem.

Key Investment Areas

Raymond James's findings, based on discussions with credit market professionals, highlight two primary financing opportunities: data centers and graphics processing units (GPUs).

• Data Centers: Credit investors are showing strong interest in financing data centers with high-quality tenants. The firm identified Owl Rock and Ares Management as established investors in this space, noting that a proven track record and operational capabilities are becoming increasingly important.
• GPU Financing: This area presents more uncertainty due to questions surrounding the long-term lifespan and resale value of current-generation GPUs. However, Raymond James expects capital will flow into this segment through various short-term financing structures.

Firms' Strategic Positioning

Apollo Global Management is expected to become a significant player in the GPU financing market, according to the report. Raymond James anticipates Apollo will structure deals that offer attractive risk-adjusted returns, even with the uncertainty around the hardware's residual value.

Ad

Meanwhile, the established presence of Owl Rock and Ares in data center investment places them in a strong position as demand for AI-powering facilities grows. The analysis suggests all three firms stand to gain from continued strong demand for credit investments and their solid performance history.

Broader Market Context

The report also pointed to a healthy credit market with ample capacity to fund large-scale AI projects. Raymond James observed that lending capacity remains strong, with competition among credit investors having increased over the past year.

As evidence of market liquidity, the firm noted that even software companies perceived as vulnerable to AI disruption have been able to successfully refinance their debt. This backdrop suggests that debt markets will likely have sufficient capacity to meet the funding needs of the AI infrastructure build-out.