The latest inflation data offered fresh evidence that price pressures remain contained, even as investors continue to wrestle with concerns over interest rates, fiscal deficits and an increasingly fragmented geopolitical landscape.
Yet for some of Wall Street’s largest alternative asset managers, those macro debates are beginning to take a back seat.
Apollo Global Management co-President John Zito said the usual checklist of inflation, deficits, interest rates and political fragmentation matters far less than a single emerging force: artificial intelligence.
"I spend very little time thinking about most of the things you just brought up," Zito said, when asked about the macro environment during the Morgan Stanley Financial Services Conference on June 10.
"I think the only thing that matters is whether what's going on with Anthropic in the labs is real or not. It's so dwarfing with what's going on in the world."
Traditional macro signals, such as the latest inflation reading and central bank policy trajectory, still shape financing conditions. But Zito argued they are increasingly secondary to technological disruption that is moving at a scale and speed that is difficult to price.
"If AI is real, it's so hyper deflationary to so many things over the long term that it's really hard to take risk," he said, adding that forecasting the next 12 to 24 months has become "as hard an environment to probability weight what the world looks like. It’s just a really difficult environment."
The implication is not just volatility, but uncertainty about the structure of future earnings itself.
Zito pointed to frontier AI companies such as Anthropic as evidence of how quickly the economics of entire industries could change. The revenue projections being discussed in Silicon Valley, he said, are unlike anything seen in traditional businesses, with companies potentially scaling from tens of billions of dollars in annualized revenue to hundreds of billions in a matter of years.
Zito expects AI’s benefits to accrue disproportionately to large-scale platforms and infrastructure providers, while some software businesses and smaller companies could come under pressure as competition intensifies and margins compress.
"I think some businesses are going to massively thrive," he said, "but most of the efficiencies will be driven toward the big-scale players."
That view is already filtering into Apollo's positioning. The firm, which manages a wide range of credit and alternative strategies, has been leaning into assets that can withstand macro and technological volatility.
Zito highlighted increased exposure to Treasurys and hard assets, as well as a tilt toward inflation-protective positioning. At the same time, Apollo has participated in large-scale, infrastructure-adjacent financing deals, including high-profile allocations tied to companies such as Broadcom and SpaceX, as well as sports, in what he described as part of a broader push into durable, systemically important assets.
Zito said the goal is to build portfolios that can withstand a range of outcomes, particularly if artificial intelligence proves to be a powerful deflationary force over time.
That, he argued, is what makes the current environment so difficult to navigate. Investors still hang on every inflation report and Fed signal, but the larger uncertainty may be whether AI becomes the kind of transformative force that rewrites assumptions about growth, margins and inflation itself.
“If you’re not diversified, there’s not much you can do,” Zito said.
Photo: Image by Piotr Swat via Shutterstock
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.