Ares CEO Arougheti downplays fears of AI disrupting software businesses

By Arasu Kannagi Basil

Feb 5 (Reuters) - ⁠Ares Management CEO ⁠Michael ‍Arougheti shrugged off concerns that AI could disrupt software businesses and impact its earnings growth as a rout in software stocks extended on ‍Thursday.

U.S. software stocks deepended their slide on Thursday amid investor jitters ​that AI could pose an existential threat to the sector.

Ares shares slumped as much as 10.9% amid ​a broad sell-off in alternative asset manager stocks as investors weigh the sector's exposure to software companies.

The firm disclosed its exposure to software companies represents 6% of its total assets.

"Our software ​portfolio is highly diversified across many sub-sectors with a very small percentage of the portfolio that we deem to have high risk of AI disruption," ​Arougheti told analysts, adding that Ares saw no change to its earnings growth outlook from AI risks in its ‌existing portfolio.

"It is interesting to see how the markets are thinking about software companies as all being equal and not really ​understanding the difference between companies that could get ⁠disrupted by AI in places like digital content creation or data analytics and visualization versus like real entrenched enterprise systems."

STRONG FUNDRAISING ‌MOMENTUM

Ares hauled in $35.9 billion in gross new capital during the October-to-December period, lifting assets under management to $622.5 billion. It has set a target of surpassing $750 billion in AUM by 2028.

"Robust investor ‌demand across all three of our channels is continuing and we expect another strong year of ‌fundraising which could match or exceed our record levels from 2025," Arougheti said in a statement.

Demand for private credit from institutional investors has been resilient despite rising concerns as they chase ‍higher returns and diversify beyond public markets.

Ares, which is heavily credit-focused, deployed $45.8 billion of capital in the fourth quarter. Most of ⁠it was dedicated to U.S. and European direct lending, real estate and alternative credit.

Quarterly after-tax realized income was $1.45 per share, compared with $1.23 per share a year earlier.

The firm joined the benchmark S&P 500 index in December.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shreya Biswas and Shailesh Kuber)

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