Apollo Warns AI Is Complicating Software Valuations

Private equity firm says AI is compressing competitive advantage timelines, even as dealmaking continues through uncertainty.

Apr. 8, 2026 at 9:20pm

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A high-end, photorealistic studio still-life photograph featuring a stack of financial documents, a laptop, and a pen arranged elegantly on a clean, grey seamless background, conveying a sense of uncertainty and disruption in the software industry.As AI rapidly reshapes the software industry, private equity firms must rethink traditional valuation models to navigate the new era of compressed competitive advantage.NYC Today

Apollo's David Sambur says the rapid pace of AI disruption is fundamentally complicating how investors value software businesses, as traditional metrics used to assess software companies are being disrupted alongside the products themselves. Sambur warns that a SaaS product that looks dominant today could find its core functionality replicated by an AI model in a matter of months, not years, forcing firms to rethink how they underwrite risk in the sector.

Why it matters

The rise of AI is upending the traditional private equity playbook for valuing software companies. Firms can no longer rely solely on predictable revenue streams, strong retention rates, and defensible market positions, as AI compresses the timeline for competitive advantage. This forces private equity investors to evolve their due diligence process to assess AI-driven disruption risk.

The details

Sambur says the compression of competitive advantage timelines due to AI is a key challenge facing private equity firms trying to deploy capital into the technology sector. A SaaS product that looks dominant today could find its core functionality replicated by an AI model in months, not years, making traditional software valuation metrics less reliable. This forces firms to assess how exposed a target's product roadmap is to AI-driven disruption, whether its customer base will remain sticky as alternatives emerge, and how quickly the company can integrate AI to defend its position.

  • Apollo Global Management reported over $50 billion in unspent private equity commitments as of its most recent earnings.
  • Dealmaking is expected to accelerate in the enterprise software sector through the second half of 2025, but with more cautious valuations reflecting AI-driven obsolescence risk.

The players

Apollo Global Management

A private equity firm that manages over $600 billion in assets.

David Sambur

The co-head of private equity at Apollo Global Management.

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What they’re saying

“Software companies were already difficult to price accurately, and the explosion of artificial intelligence capabilities has made that task considerably harder.”

— David Sambur, Co-head of private equity

“Fortunes are made in volatility, and the firms that can navigate opaque valuations and geopolitical risk are the ones that will generate outsized returns.”

— David Sambur, Co-head of private equity

What’s next

Watch for private equity deal flow in enterprise software to accelerate through the second half of 2025, but expect the terms to reflect heightened caution around AI-driven obsolescence risk.

The takeaway

The rise of AI is forcing private equity firms to rethink how they value software companies, as traditional metrics become less reliable in the face of rapidly changing competitive dynamics. Firms that can accurately model AI-driven disruption risk will have a significant edge in the market.