AI Fears Hit Private Capital Groups: Ares, KKR & Blue Owl Shares Slide

Shares of several major US private capital firms – Ares, Blue Owl, and KKR – declined on Thursday as concerns mount over potential disruptions caused by advances in artificial intelligence. The firms warned that market volatility stemming from these fears could delay fundraising and asset sales.

AI Concerns Impacting Private Capital

A recent sell-off in technology stocks has contributed to the uncertainty, with investors worried that AI tools could render many software businesses obsolete. This poses a risk to private capital firms that have heavily invested in this sector over the past decade.

Potential Delays and Reduced Growth

The volatility is prompting these groups to consider postponing asset sales, which would impact their ability to generate performance fees. Overall asset growth could also slow as investors hesitate to commit new funds or withdraw existing investments.

Did You Know? Ares reported record inflows of $34.4 billion in the three months ending December, lifting its assets under management to a new high of $623 billion.

During earnings calls held on Thursday, both KKR and Blue Owl cautioned about their financial outlook for 2026. KKR’s chief financial officer, Robert Lewin, indicated the firm might delay selling some assets this year, potentially reducing cash flow.

Lewin stated that delaying asset sales could mean realising profits in subsequent years, but emphasized KKR’s strong position for the future. Blue Owl, meanwhile, reported rising redemptions at its credit funds, which could hinder its long-term growth targets.

Financial Impacts and Responses

Shares in Ares slid by more than 11 percent to $121.87, while KKR fell 5.5 percent to $99.17 and Blue Owl declined 3.8 percent to $11.63. Shares of these firms, along with competitors like Blackstone, have collectively fallen over 15 percent this year as investors reassess growth prospects.

Expert Insight: The concerns raised by these firms highlight the growing uncertainty surrounding the impact of AI on established business models. The potential for disruption is forcing private capital firms to re-evaluate their investment strategies and prepare for a potentially more volatile market.

Despite the concerns, some executives expressed confidence. Marc Lipschultz, Blue Owl’s chief executive, dismissed the idea of widespread software obsolescence as “ridiculous.” Scott Nuttall, co-chief executive of KKR, noted that his firm had been preparing for AI-related disruption for years by selling off vulnerable companies.

Ares disclosed that software represents 9 percent of its private credit assets under management and reported that non-performing loans in its software portfolio were “close to zero.”

Frequently Asked Questions

What caused the stock declines for Ares, Blue Owl, and KKR?

The declines were triggered by warnings from the firms about potential impacts from rising market volatility and fears of AI disruption, which could slow fundraising and delay asset sales.

What is Blue Owl’s outlook for fee growth in 2026?

Blue Owl anticipates only “modest” fee growth in 2026 due to rising redemption requests, marking a slowdown from its roughly 20 percent asset and fee growth in 2025.

How has Ares performed despite the market concerns?

Ares reported record inflows of $34.4 billion in the three months to the end of December, increasing its assets under management to $623 billion.

As AI continues to evolve, how might private capital firms adapt their investment strategies to navigate this changing landscape?