Software Selloff Impact on Alternative Asset Managers: Market Analysis

This analysis is based on the Barron’s report [1] published on February 4, 2026, which examined how a technology sector selloff has disproportionately affected alternative asset managers, despite Goldman Sachs analysts characterizing the market reaction as overdone. The report highlights that alternative asset managers experienced a 7% share decline on February 3, exceeding the software sector’s 6% drop, even though software represents only approximately 5% of firmwide management fees. The analysis identifies key market dynamics affecting Ares Management (ARES), Carlyle Group (CG), KKR, and BlackRock (BLK), along with corporate developments including KKR’s announced $5.1 billion acquisition of ST Telemedia Global Data Centres. Market indicators suggest a mixed outlook with near-term volatility offset by structural growth fundamentals in alternative assets [0][1][3].

The technology sector experienced the most significant decline among S&P 500 sectors on February 4, 2026, falling

, while Financial Services demonstrated relative resilience with a gain [0]. This sector divergence created a notable impact on alternative asset managers, whose share prices fell more sharply than the software companies themselves. The NASDAQ Composite dropped 1.35% on February 4, following a 1.74% decline on February 3, indicating persistent pressure on technology-exposed equities [0].

The selloff was triggered by concerns surrounding an Anthropic AI tool that raised disruption fears for software companies, with the negative sentiment extending beyond pure technology firms into financial services companies with technology exposure or software-adjacent business models [2]. This broader market reaction highlights how AI-related concerns can create cascading effects across seemingly unrelated sectors, particularly those with perceived technology linkages or growth-oriented valuations.

The four major alternative asset managers analyzed show distinct performance patterns and financial characteristics:

experienced the most significant pressure among the peer group, with shares declining approximately 21% over the recent period before recovering in after-hours trading to $137.22, representing a 4.27% gain [0]. Trading volume spiked to 7.77 million shares, more than double the daily average of 3.59 million, indicating heightened investor interest and uncertainty [0]. The stock trades at a premium valuation of 57.9x P/E, suggesting elevated growth expectations that create vulnerability to multiple compression if concerns persist.

showed relative stability with after-hours trading at $58.39 (+0.21%), though the stock maintains a more moderate 32.8x P/E multiple compared to ARES [0]. The company exhibits an aggressive accounting profile with negative free cash flow of $837 million in 2024, distinguishing it from peers with stronger cash generation characteristics [0].

demonstrated resilience with after-hours trading at $104.77 (+1.44%), despite the challenging market environment [0]. The company announced a strategic $5.1 billion acquisition alongside Singtel to acquire full control of ST Telemedia Global Data Centres (STT GDC), representing a significant expansion of its data centre infrastructure platform [3]. This transaction values the remaining 82% stake at S$6.6 billion ($5.1 billion), with an enterprise value of S$13.8 billion ($10.9 billion), positioning KKR to hold 75% of the combined entity post-closing [3].

, the largest alternative asset manager by market capitalization at $166.97 billion, traded at $1,076.16 (+0.57%) with the most conservative financial profile among peers, including a 30.51x P/E multiple and lowest debt risk classification [0].

Goldman Sachs analysts have articulated a constructive outlook on alternative asset managers, centering their thesis on several key factors [1]. First, the limited actual software exposure—estimated at approximately 5% of firmwide management fees—suggests the 7% decline in alternative manager share prices is disproportionate to fundamental risk exposure [1]. Second, the diversified revenue streams across private equity, real estate, credit, and infrastructure provide natural buffers against sector-specific weakness in any single category. Third, the structural growth trajectory in alternative assets remains intact, driven by institutional investor demand for portfolio diversification and non-traditional return sources [1].

This analytical framework implies that current market pricing may not adequately reflect the fundamental business quality and growth prospects of well-positioned alternative asset managers, creating potential value opportunities for investors with appropriate risk tolerance and investment horizons.

Despite market volatility, alternative asset managers continue to pursue strategic initiatives that demonstrate business development momentum. KKR’s acquisition of STT GDC represents a significant transaction in the data centre infrastructure sector, with the target company having expanded its pipeline capacity from 1.4GW to over 1.7GW since 2024 [3]. The acquisition is expected to close in early H2 2026, subject to regulatory approvals, and positions KKR favorably in the growing digital infrastructure space [3].

Ares Management’s secondaries unit is leading a syndicate providing capital to Finint Infrastrutture for the acquisition of Venice’s Marco Polo Airport owner, demonstrating continued activity in infrastructure investing despite market uncertainty [4]. Additionally, Ares Management is scheduled to report Q4 2025 earnings on February 5, 2026, with market expectations focused on assets under management growth, rising revenues, and recent acquisitions, though expense pressures remain a monitoring factor [5].

The 7% decline in alternative asset manager shares on February 3 exceeding the software sector’s 6% decline reveals an interesting market dynamic where concern about AI disruption may have extended beyond rational risk assessment [1]. Given Goldman Sachs’s estimate that software represents only 5% of firmwide management fees, the magnitude of the selloff suggests emotional or technical selling pressures rather than fundamental deterioration in business prospects [1]. This pattern is consistent with historical market behavior during periods of sector-specific stress, when correlated selling can affect companies with only peripheral exposure to the triggering concern.

The significant disparity in P/E ratios among alternative asset managers—ranging from 30.51x for BlackRock to 57.9x for Ares Management—reflects varying market expectations for growth, profitability, and risk [0]. Higher-multiple stocks like ARES face elevated multiple compression risk if growth concerns persist, while lower-multiple names may offer greater downside protection in volatile markets. The concentration of trading volume in ARES (2.1x average volume) indicates that investors are actively processing information about the company’s specific situation, potentially creating short-term price dislocations [0].

Both Ares Management and Carlyle Group exhibit high-risk debt classifications according to internal financial analysis, though their underlying business characteristics differ significantly [0]. ARES maintains strong free cash flow of $2.7 billion, providing substantial capacity to meet debt obligations, while CG shows negative free cash flow of $837 million, suggesting greater vulnerability to funding cost increases or revenue disruptions [0]. KKR presents a moderate risk profile, while BlackRock demonstrates the most conservative leverage characteristics among the peer group [0].

KKR’s announced $5.1 billion acquisition of STT GDC demonstrates that major alternative asset managers continue to pursue substantial transactions despite market volatility [3]. The willingness to commit significant capital at attractive valuations during a period of sector weakness may indicate management confidence in long-term value creation, though integration risks and execution challenges remain inherent in large-scale acquisitions. The transaction also highlights the continued growth of digital infrastructure as a core alternative asset class with structural demand drivers.

Continued market concern about AI-driven disruption to traditional software business models could maintain pressure on stocks perceived to have technology exposure, including alternative asset managers with even modest software fee components [2]. This sentiment risk may persist until clearer evidence emerges regarding actual competitive impacts on affected industries.

The Q4 2025 earnings reports from Ares Management (February 5) and ongoing results from other alternative asset managers may reveal impacts from market conditions and could provide management guidance that either confirms or challenges current market expectations [5]. Elevated trading volumes suggest investors are closely monitoring these disclosures for new information.

ARES trading at 57.9x P/E creates vulnerability to multiple compression if growth concerns or market sentiment pressure persist [0]. Historical patterns suggest that high-multiple stocks can experience significant price declines during periods of risk aversion, even absent fundamental business deterioration.

If Goldman Sachs’s assessment proves accurate and the selloff is indeed overdone, alternative asset managers with limited actual software exposure may experience meaningful share price recovery as market participants reassess risk exposure [1]. The structural growth in alternative assets driven by institutional demand provides a foundation for potential multiple expansion.

KKR’s successful execution of the STT GDC acquisition could create value through portfolio diversification and participation in digital infrastructure growth, potentially offsetting broader market volatility impacts [3]. Similarly, Ares Management’s infrastructure investments and acquisition activity demonstrate continued business development momentum [4].

Alternative asset managers’ revenue diversification across private equity, real estate, credit, and infrastructure provides natural buffers against sector-specific weakness [1]. This structural characteristic may prove increasingly valuable if technology sector volatility persists or spreads to other market segments.

The current market volatility presents heightened short-term uncertainty, making timing-sensitive analysis particularly important. Key upcoming catalysts include Ares Management’s Q4 2025 earnings report on February 5, 2026, which may provide management’s perspective on market conditions and business outlook [5]. The resolution of AI disruption concerns, likely to unfold over the coming weeks and months, will significantly influence market sentiment toward technology-adjacent stocks.

The February 2026 software sector selloff created a pronounced but potentially disproportionate impact on alternative asset managers, with Goldman Sachs analysts characterizing the 7% decline in alternative manager shares as overdone given the sector’s limited (~5%) software fee exposure [1]. Ares Management experienced the most significant pressure with a 21% decline, though the stock showed recovery signs in after-hours trading alongside elevated trading volumes [0]. KKR’s strategic $5.1 billion data centre acquisition demonstrates continued deal-making activity despite market volatility [3].

Financial analysis reveals varying risk profiles among alternative asset managers, with ARES and CG exhibiting high-risk debt classifications though with divergent cash flow characteristics ($2.7B positive for ARES versus $837M negative for CG) [0]. P/E multiples range from 30.51x (BLK) to 57.9x (ARES), creating different risk-return profiles for investors processing current market conditions [0].

The technology sector’s 2% decline on February 4 and NASDAQ’s 1.35% drop indicate persistent sector pressure, though the Financial Services sector’s 0.93% gain suggests that diversification may provide some protection against technology-specific concerns [0]. Investors monitoring this situation should track upcoming earnings reports, AI disruption developments, and acquisition execution as key catalysts for potential market reassessment.

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[0] Ginlix Analytical Database - Real-time quotes, market indices, sector performance, and financial analysis data

[1] Barron’s - “The Software Selloff Is Pummeling Alternative Managers. Three Stocks to Weather the Storm.” (February 4, 2026)
URL: https://www.barrons.com/articles/software-alternative-managers-three-stocks-80f978aa

[2] Yahoo Finance - “Anthropic AI tool sparks selloff in software stocks” (February 2026)
URL: https://sg.finance.yahoo.com/news/anthropic-ai-tool-sparks-selloff-143304538.html

[3] CNBC - “KKR and Singtel to acquire ST Telemedia Global Data Centres for $5.1 billion” (February 4, 2026)
URL: https://www.cnbc.com/2026/02/04/kkr-and-singtel-stake-in-stt-gdc-for-over-5-billion.html

[4] Bloomberg - “Ares’ Secondaries Unit Said to Invest in Venice Airport Deal” (February 2, 2026)
URL: https://www.bloomberg.com/news/articles/2026-02-02/ares-secondaries-unit-said-to-invest-in-venice-airport-deal

[5] Yahoo Finance - “Ares Management Set to Report Q4 Earnings: What’s in the Cards?” (February 3, 2026)
URL: https://finance.yahoo.com/news/ares-management-set-report-q4-164800953.html