AI Stocks Will Again Outperform In 2025

Artificial intelligence, AI stocks like NVIDIA, Broadcom, AMD, Celestica, Reddit, Palantir etc. will again outperform in 2025, according to Wolfteam Ltd.'s projections and estimates.

Artificial intelligence, AI's gravitational pull is just too strong. Via AI businesses can save a lot on costs and the nearly 300 000 - 400 000  people annual cuts in technology companies have shown just that in the last 3-4 years. There is a chart showing that since 2015 technology companies have hired more than 4 000 000 people and the cuts up to 2022 were only like 15 % of the total. The artificial intelligence, AI job cuts, however accelerated since 2022 and now the total of cuts compared to the hired total is more like 30 %.

Investors generally have liked technology job cuts and have rewarded with stock price gains the technology companies that have cut the most. Cases in point are Meta and Alphabet. Investors, apparently think technology companies are bloated with personnel and cuts are needed to improve profitability in the long-term. And profitability will ultimately drive dividends pay outs which investors reward with for example 20 % stock price/market capitalization jumps when inauguration dividends are announced. Much like the case of Apple inc, years ago when they announced they would start paying out dividends.

The US technology labor force unemployment is 6.00 %, compared with the overall unemployment rate of 4.00 % for January 2025. This discrepancy is due to the efficiency AI companies like NVIDIA, Broadcom, AMD, Celestica, Reddit, Palantir etc. provide. They make businesses run more efficiently and efficiencies are yet to be realized. That is why their stock market capitalization will continue to benefit in 2025, in Wolfteam Ltd.'s view.

Blackstone And CVC Comparison

 

Blackstone Inc, the global leader in private equity, real assets, private credit looks overvalued when compared to CVC Capital Partners or CVC, one of the leading firms in private equity, private credit which looks undervalued, comparatively, according to Wolfteam Ltd.'s projections and estimates.

Blackstone sports 199.93 billion USD market capitalization, while CVC has 24.24 billion EURs of market capitalization. Blackstone's Price/Earnings ratio is 45.52, while CVC's Price/Earnings ratio is 53.26. Blackstone distributes 2.40 % dividend yield, while CVC does not pay any dividends.

Blackstone's total assets under management are 1.127 trillion USDs, while CVC's assets under management are 193 billion EURs, according to both firms' latest financial reports filings.

On the accounts above Blackstone seems overvalued relative to CVC, while CVC seems undervalued on a relative basis.

Here are Blackstone's capital metrics:

Total Assets Under Management (“AUM”) of $1,127.2 billion
– Fee-Earning AUM of $830.7 billion
– Perpetual Capital AUM of $444.8 billion
▪ Inflows of $57.5 billion in the quarter and $171.5 billion for the year
▪ Deployment of $41.6 billion in the quarter and $133.9 billion for the year
▪ Realizations of $25.9 billion in the quarter and $87.1 billion for the year
 

 

Here are CVC's capital metrics:

We are a scaled and
diversified global leader
in Private Markets with
multiple growth avenues.
Key Highlights
Note: All figures are as at 30 June 2024.
1. Acquisition of CVC DIF closed on 1 July 2024.
2. Includes GP commitment.
3. Includes GP commitment and overflow fund.
4. Source: J.P. Morgan Collaterised Loan Obligations Weekly
Datasheet as at 15 July 2024, data excludes Private Credit/
Middle Market deals and includes re-issues of collateralised loan
obligations (‘CLOs’).
5. Does not include €0.3bn in LP co-investment/sidecar vehicles.
Includes GP commitment.
€175bnExcluding CVC DIF
€193bnIncluding CVC DIF

Here is Blackstone's latest fourth quarter 2024 financial statement:
 

Blackstone | 3
BLACKSTONE’S FOURTH QUARTER AND FULL YEAR 2024 SEGMENT EARNINGS
Fee Related Earnings per Share is based on end of period DE Shares Outstanding (see page 24, Share Summary). DE per Common Share is based on DE Attributable
to Common Shareholders (see page 23, Shareholder Dividends) and end of period Participating Common Shares outstanding. Full year FRE per Share and DE per
Common Share amounts represent the sum of the last four quarters. See pages 32-33 for the Reconciliation of GAAP to Total Segment Measures.% Change % Change
($ in thousands, except per share data) 4Q'23 4Q'24 vs. 4Q'23 FY'23 FY'24 vs. FY'23
Management and Advisory Fees, Net 1,653,831$ 1,859,291$ 12% 6,663,244$ 7,133,534$ 7%
Fee Related Performance Revenues 168,994 1,399,276 728% 858,527 2,135,945 149%
Fee Related Compensation (470,408) (1,077,477) 129% (2,088,110) (2,739,322) 31%
Other Operating Expenses (310,874) (345,169) 11% (1,084,333) (1,248,092) 15%
Fee Related Earnings 1,041,543$ 1,835,921$ 76% 4,349,328$ 5,282,065$ 21%
Realized Performance Revenues 693,213 865,080 25% 2,061,102 2,287,031 11%
Realized Performance Compensation (287,628) (289,595) 1% (896,017) (951,246) 6%
Realized Principal Investment Income 19,202 25,613 33% 110,932 92,526 (17)%
Net Realizations 424,787 601,098 42% 1,276,017 1,428,311 12%
Total Segment Distributable Earnings 1,466,330$ 2,437,019$ 66% 5,625,345$ 6,710,376$ 19%
Distributable Earnings 1,388,180$ 2,169,493$ 56% 5,060,955$ 5,966,742$ 18%
Additional Metrics:
Net Income Per Share of Common Stock, Basic 0.20$ 0.92$ 360% 1.84$ 3.62$ 97%
FRE per Share 0.86$ 1.50$ 74% 3.58$ 4.32$ 21%
DE per Common Share 1.11$ 1.69$ 52% 3.95$ 4.64$ 17%
Total Segment Revenues 2,535,240$ 4,149,260$ 64% 9,693,805$ 11,649,036$ 20%
Total Assets Under Management 1,040,192,447$ 1,127,179,996$ 8% 1,040,192,447$ 1,127,179,996$ 8%
Fee-Earning Assets Under Management 762,607,902$ 830,708,603$ 9% 762,607,902$ 830,708,603$ 9% 

Here are CVC's earnings:

Statutory statement of profit or loss (€ 000) Jun-24 Jun-23
Management fees 443,739 365,713
Carried interest and performance fees 108,725 87,531
Investment income 83,274 49,295
Other operating income 2,491 1,033
Total revenue 638,229 503,572
Advisory fee expense – (210,744)
Personnel expenses (182,493) (27,568)
General and administrative expenses (106,757) (31,561)
Change in valuation of forward liability (209,420) (58,762)
Foreign exchange (losses)/gains (191) 2,169
Expenses with respect to investment vehicles (1,609) (137)
EBITDA 137,759 176,969
Depreciation and amortisation (33,580) (12,923)
Total operating profit 104,179 164,046
Finance income 4,400 5,971
Finance expense (22,495) (13,688)
Profit before income tax 86,084 156,329
Income tax charge (6,049) (8,545)
Profit after income tax 80,035 147,784
Attributable to:
Equity holders of the parent 44,794 136,330
Non-controlling interests 35,241 11,454

Although Blackstone is more profitable than CVC, still Blackstone's looks overvalued compared to CVC. Part of the reason for Blackstone's high market capitalization are its technology investments and leadership in private credit. Although Blackstone might look overvalued on a relative basis, on an absolute value Blackstone is still intrinsically undervalued, according to Wolfteam Ltd.'s projections and estimates. CVC is also intrinsically undervalued.

CVC And KKR Comparison

KKR's market capitalization is 124.12 billion USD, while CVC's market capitalization is 24.48 billion EURs. 

KKK has 638 billion USDs of assets under management, while CVC has 175 billion EURs of assets under management.

So measured on assets under management alone KKR seems overvalued relative to CVC. 

KKR, however is trading at a lower Price/Earnings multiple of 42.46 compared to CVC's Price/Earnings ratio of 53.92. In addition KKR pays a 0.50 % dividend yield, while CVC does not distribute dividends.

So on these metrics KKR looks fairly valued at 4.3 times CVC's market capitalization.

Both KKR and CVC are undervalued according to Wolfteam Ltd.' projections and estimates.

One of the reasons KKR is more valuable is the fact that that a larger proportion of its assets are invested in private equity and private credit. In addition KKR's private equity and credit strategies returned 14 % in 2024.

Bitcoin Mining Drives AI. And AI Stocks Respectively

 

To mine Bitcoin one needs extensive computer resources. Basically, one needs the same computer chips that feed artificial intelligence, AI computing. So in fact, Bitcoin mining drives to a large extent AI computing and AI computer chips production.

The US President Donald Trump and the US administration are very friendly towards Bitcoin. Bitcoin's price could top 200 000 USD in 2025, according to Wolfteam Ltd.'s projections and estimates.

Such a development would bode very well for artificial intelligence, AI computing chips production and will support the market capitalizations of companies like NVIDIA and Broadcom.

Ares Management Corp Valuation

 

Ares Management Corp. or Ares, the private credit and private equity alternative asset management leading global firm is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Ares' intrinsic worth is 82 billion USD, compared with Ares' current market capitalization of  59.59 billion USD, in Wolfteam Ltd.'s view.

Private credit is in a boom phase driven in part by lending to expanding technology companies, packaging loans into Collateralized Debt Obligations and other credit derivative securities. Most of Ares' 484 billion USDs of assets under management are in private credit and Ares benefits handsomely from the private credit boom. Private credit booms due to the reach of yield of pension funds looking to fulfill pension fund promises to retirees, insurance companies trying to cover future insurance events and increase profits and endowment reaching for extra income. On top of that many individual investors are looking for additional credit yield above US treasuries in their portfolios. And Ares Management Corp benefits hugely from strong investor inflows into its private credit funds. Only in 2024 Ares raised as much as 93 billion USDs of new funds.

Ares recently reported fourth quarter and full year 2024 results:

'GAAP net income attributable to Ares Management Corporation was $177.3 million for the quarter ended December 31, 2024. On a basic and diluted basis, net income attributable to Ares Management Corporation per share of Class A and non-voting common stock was $0.72 for the quarter ended December 31, 2024.

After-tax realized income was $434.7 million for the quarter ended December 31, 2024. After-tax realized income per share of Class A common stock was $1.23 for the quarter ended December 31, 2024. Fee related earnings were $396.2 million for the quarter ended December 31, 2024.'

“During 2024, we set many financial records, including our best year ever in gross fundraising and capital deployed. We raised $93 billion of new funds in 2024 and ended the year with $484 billion of AUM,” said Michael Arougheti, Chief Executive Officer of Ares. “We continued to expand our investment platform, diversify our distribution channels across institutional, wealth and insurance and generate compelling investment performance for our investors. As we head into 2025, we are optimistic that we are entering into a more active transaction environment which should create more investment opportunities for our platform.”

“With a record $95 billion of assets under management not yet paying fees, we are well positioned to invest opportunistically across a broad range of our strategies for investors and to drive continued strong growth in our key financial metrics over the next several years,” said Jarrod Phillips, Chief Financial Officer of Ares. “We are making excellent progress on GCP International and we now expect the transaction will close in the first quarter. We believe the GCP International business we are acquiring is well positioned and we expect progress on a number of new fundraising initiatives this year.” 

In short, Ares is on a high growth trajectory in a booming market for private credit. And its stock market capitalization is yet to unlock tens of billions of USDs of value.

AI Stocks Are Undervalued. DeepSeek Used Distillation Technique. Which Will Only Increase Future AI Data Spending

 

AI stocks remain undervalued in the long-term, according to Wolfteam Ltd.'s projections and estimates.

DeepSeek, when developing its very low cost R1 artificial intelligence, AI chat bot used the so called distillation technique. Which basically means DeepSeek first learned first hand from the answers of OpenAI's ChatGPT and Google's Gemini AI chat bots to develop the shocking high-scale capabilities rivaling ChatGPT at fraction, 6 % of the cost of 100 mln. USD used to build ChatGPT-4.

Distillation is a uniquely clever way to learn from the leading AI model chat bots on the planet. It saves costs and produces great results rivaling Gemini and ChatGPT artificial intelligence, AI chat bots. That said however, distillation is a way of reproducing answers. It is still valid that the one company that invests in cutting edge AI technology like data centers will lead the way.

In short, the AI race with the most powerful data centers, supercomputers with gigantic RAM memory is just starting. The companies at the cutting edge will win the AI, artificial intelligence race.

Private Credit Is In A Boom Phase

 

Private credit comprising making loans and underwriting CDO, CLOs etc. is in a boom phase.

The leading alternative asset management companies like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. stand to benefit enormously from managing money in private credit funds.

The loans they make are packaged by banks and sold on making even greater returns for investors. Barring a black swan event private credit's boom will continue in the next few years, according to Wolfteam Ltd.'s projections and estimates.

Simply the reach for yield of institutional investors is very strong.

AI Stocks Will Recover

 

NVIDIA, Broadcom, Intel, Qualcomm and other artificial intelligence graphical processing units, computer processing units stocks could fall further, 30 % + from their recent peaks, but they will recover in 2 years, according to Wolfteam Ltd.'s projections and estimates.

Artificial intelligence, AI is a disruptive force, the fourth industrial revolution and will continue to transform all business sectors. NVIDIA, Broadcom, Intel, Qualcomm and other artificial intelligence graphical processing units, computer processing units still hold a lot of unlocked value in the long-term.

Internet of things could be the next driving force for AI. The DeepSeek moment ensures that artificial intelligence, AI model building capabilities will transcend from huge data centres costing billions of USDs now to supercomputers, than powerful computers in large corporations, than powerful PC machines in small and medium enterprises, than finally to personal computer workstations and in end effect ot smartphones.

Smartphone and personal computer chip manufacturers and designers like Apple Inc and Samsung stand to benefit from the proliferation of AI and artificial, AI becoming ubiquitous.

CVC Valuation

 

CVC Capital Partners or CVC, the European private equity and alternative investments giant is undervalued, according to Wolfteam Ltd.'s projections and estimates.

CVC's intrinsic value is 34 billion USD, compared with CVC's current market capitalization of 23.99 billion USD, in Wolfteam Ltd.'s view.

For the first half of 2024 CVC made 704.954 million USD of revenue:

Pro forma statement of profit or loss (€ 000) Jun-24 Jun-23
Management fees 505,204 448,777
Carried interest and performance fees 108,056 89,569
Investment income 89,961 54,313
Other operating income 1,733 1,422
Pro forma total revenue 704,954 594,081
Personnel expenses (210,077) (188,672)
General and administrative expenses (113,240) (80,501)
Change in valuation of forward liability (209,420) (58,762)
Other expenses (2,818) 1,789
Pro forma EBITDA 169,399 267,935
Adjusted pro forma total revenue1 (€ 000) Jun-24 Jun-23
Pro forma total revenue 704,954 594,081
Less: Investment income attributable to NCI (37,608) (11,327)
Less: FX on carried interest provision (5,399) 3,972
Less: Performance-related costs (41,380) (37,924)
Adjusted pro forma total revenue 620,567 548,802
Adjusted pro forma EBITDA1 (€ 000) Jun-24 Jun-23
Pro forma EBITDA 169,399 267,935
Add back: Change in valuation of forward liability 209,420 58,762
Add back: Other APM adjustments 10,817 9,502
Adjusted pro forma EBITDA 389,636 336,199

Private equity and private credit are in a boom phase and CVC is a leader in private markets globally.

CVC raised the largest fund globally with 26.8 billion USD of assets.

CVC still holds a lot of unlocked value.

Private Equity Firms And The DeepSeek News

 

Many of the largest private equity giants like Blackstone, KKR, Apollo, Carlyle, CVC have invested large part of their private equity assets under management in technology firms. So they were affected by this Mondays, the 27th of January more than 3 % fall in the Nasdaq Composite and 17 % fall of the leading AI stock NVIDIA.

In the mid-term, however, private equity giants like Blackstone, KKR, Apollo, Carlyle, CVC will not suffer steep losses. The demand of artificial intelligence, AI computer chips is not likely to abate or lessen. Technology stocks will continue to go higher and private technology firms' values will increase in the mid-term, according to Wolfteam Ltd.'s projections and estimates.

Artificial intelligence, AI simply is too much a transformational force to be stopped by not so transformational event as DeepSeek. Yes, newer artificial intelligence, AI models will require most likely much less computing power and be cheaper. But that only will increase the penetration of artificial intelligence, AI to corporation, not technological, small and medium enterprises and ultimately to consumers who will be able to produce artificial intelligence, AI chat bots and tweak artificial intelligence, AI models on their personal computers, laptops and their smartphones even.

So private equity giants like Blackstone, KKR, Apollo, Carlyle, CVC stand to benefit in the long-term from the DeepSeek event as the value of the technology firms in their portfolios rises on AI in the mid-term.

In the long-term there will be the inevitable fall of technology stocks prices measured by more than 60 % of the Nasdaq, but for now the AI revolution is in full swing.

DeepSeek, ChatGPT And AI Analysis. Apple and Samsung Are Winners In The Current Situation

DeepSeek announced recently a chat bot similar to ChatGPT that matches ChatGPT's performance.

DeepSeek's chat bot however cost 6 million USD to produce, while ChatGPT's 4.0 last version chat bot cost 100 million USD to create.

On this piece of news over the weekend yesterday, Monday, the 27th of January NVIDIA, the largest GPU manufacturer for artificial intelligence, AI tumbled 17 % for Monday, other AI chips  manufacturers' stock prices and market capitalization like Broadcom fell 16 % or even more. Energy producers. the market capitalization of which grew a lot in the last rolling year on expectations they will have much new business feeding energy to the artificial intelligence, AI computation data centers like GE Vernova fell also by around 20 % yesterday.

In short, there seems to be a huge downward reassessment on how much will it cost to produce artificial intelligence, AI computing. The Chinese with DeepSeek, if the news are true 100 % have shown that producing artificial intelligence, AI run applications is only 6 % of the cost or many times lower than previously thought.

NVIDA Inc, the poster child of the artificial intelligence, AI felt this reassessment most acutely, since companies like Meta, Microsoft, Apple, Amazon, Alphabet were lining up until last Friday to purchase NVIDA GPUs for artificial intelligence, AI at very high prices ensuring a close to 40 % net profit margin for NVIDIA.

Now the market seems to have reassessed downwards the profitability of NVIDIA, Broadcom and other artificial intelligence, AI chips producing companies, driving down their future Price/Earnings ratios and this lowering significantly their current value.

NVIDIA, Broadcom could fall more than 30 % from their recent peaks, according to Wolfteam Ltd.'s projections and estimates, before staging a recovery. Yes NVIDIA's market capitalization could recover and even grow in 1 year. Why? Simply because DeepSeek feat has shown that artificial intelligence, AI computation is significantly cheaper, not that AI computing total demand slow. On the contrary, new, cheaper artificial intelligence, AI computer chips that produce cutting edge artificial intelligence, AI will broaden the market giving corporations, small and medium enterprises, startups and ultimately consumers with personal computers access to the most advanced artificial intelligence, AI computational capabilities.

A huge beneficiary of the current situation is Apple, in Wolfteam Ltd.'s view. The broadening of artificial intelligence, AI applications computational capability to corporations, small and medium enterprises, startups and ultimately consumers will drive more demand for Macintosh computers, iPhones, iPads on which one will possibly be able to do on premise artificial intelligence, AI, applications high grade computing.

Samsung is another potential beneficiary with its broad palette of mobile phones, computers and tablets.

Bitcoin Stocks Could Triple In Value In 2025

Coinbase, Robinhood Markets and Microstrategy or the so called Bitcoin stocks could triple in value in 2025 on Bitcoin's price surpassing 200 000 USD, according to Wolfteam Ltd.'s projections and estimates.

Bitcoin friendly deregulation from CFTC, SEC and other incoming heads of regulators, members of the new Donald Trump incoming US presidential administration could propel Bitcoin's price to more than double from the current 104 795.60 USD. The Federal Reserve cutting rates could also help.

Once the possible pending Bitcoin stark price rise enters the main stream media news flow, Bitcoin's popularity, adoption and ultimately Bitcoin investing by both retail investors and institutional investors will reach new, historic highs driving Bitcoin's price higher, in Wolfteam Ltd.'s view.

Carlyle Valuation

Carlyle Group Inc or Carlyle, the global private equity, private credit investment management firm is undervalued according to Wolfteam Ltd.'s projections and estimates.

Carlyle's intrinsic worth is 47 billion USD, compared with Carlyle's current market capitalization of 20.33 billion USDs, according to Wolfteam Ltd.'s projections and estimates.

Carlyle reported 4.393 billion USD in revenues and 809.5 million USDs in profit for the first nine months of 2024:

s) 3Q'23 3Q'24 YTD 3Q'23 YTD 3Q'24
REVENUES
Fund management fees $ 502.6 $ 532.7 $ 1,511.2 $ 1,590.7
Incentive fees 21.1 38.7 61.9 96.2
Investment income (loss), including performance allocations (17.7) 1,831.5 (99.2) 2,033.9
Revenue from consolidated entities 152.7 180.1 411.7 510.6
All other revenues 57.9 52.2 152.1 161.9
Total Revenues 716.6 2,635.2 2,037.7 4,393.3
EXPENSES
Cash-based compensation and benefits 267.6 207.5 798.4 635.7
Equity-based compensation 64.4 121.6 186.8 355.1
Performance allocations and incentive fee related compensation (53.9) 1,151.0 (40.4) 1,222.4
General, administrative and other expenses 143.0 176.6 470.7 512.2
Expenses from consolidated entities 102.5 162.0 298.3 438.7
Interest and other non-operating expenses 31.5 30.2 92.0 91.3
Total Expenses 555.1 1,848.9 1,805.8 3,255.4
Net investment income (loss) of consolidated funds (9.3) 2.5 9.9 (9.6)
Income (loss) before provision for income taxes1 152.2 788.8 241.8 1,128.3
Provision (benefit) for income taxes 41.2 173.1 68.2 264.5
Net income (loss) 111.0 615.7 173.6 863.8
Net income attributable to non-controlling interests 29.7 20.0 90.0 54.3
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ 81.3 $ 595.7 $ 83.6 $ 809.5
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ 0.23 $ 1.67 $ 0.23 $ 2.26
Diluted $ 0.22 $ 1.63 $ 0.23 $ 2.21
Income (loss) before provision for taxes margin2 21.2 % 29.9 % 11.9 % 25.7 %
Effective tax rate 27.1 % 21.9 % 28.2 % 23.4 %
Net performance revenues3 $ (64.4) $ 634.5 $ (163.9) $ 604.3
Carlyle Third Quarter 2024 U.S. GAAP Results

Carlyle's assets under management are 447 billion USD, while 95 billion USDs are so called perpetual capital, which are insurance fees from the global investment solutions business of Carlyle. Such insurance premium fees are stable in nature and could be invested for the long-term.

Wall Street equity research analysts put in 0, zero when they model the future private equity, credit returns on investment of Carlyle. This is a farfetched assumption, in Wolfteam Ltd.'s view. Carlyle and other global private equity investment management firms have proven they can make returns on their investments, many a times in excess of the average Standard and Poor's 500 index yearly return.

That is why Carlyle holds huge unlocked value. Carlyle's fundraising is strong, raising tens of billion of USDs for investments throughout 2024. In addition, like many of the other leading private equity firms Carlyle has invested in technology related firms like data management infrastructure centers and other AI technology infrastructure firms. The technology sector lead by the Magnificent 7 or Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and Netflx has ridden strongly the AI wave and the technology sector move higher looks set to continue.

Carlyle has invested much of its private equity funds in technology adjacent, artificial intelligence, AI especially businesses and Carlyle could unlock tens of billions of USDs in value in the next 2-3 years as the private capital markets boom continues, facilitated by AI technology.

Apollo Valuation

 

Apollo Global Management or just Apollo, the private equity, credit and insurance business giant is undervalued.

Apollo's intrinsic worth is 170 billion USDs compared with Apollo's current market capitalization of 102.29 billion USDs, according to Wolfteam Ltd.'s projections and estimates. The private markets in which Apollo Global Management is active are in secular, long-term growth trend.

Apollo is very profitable earning 3.018 billion USD in the already reported first nine months of 2024:

GAAP Income Statement (Unaudited)

In millions, except per share amounts) 3Q'23 2Q'24 3Q'24 YTD'23 YTD'24
Revenues
Asset Management
Management fees $462 $462 $476 $1,328 $1,376
Advisory and transaction fees, net 157 267 181 482 617
Investment income (loss) 292 278 230 882 910
Incentive fees 18 47 35 59 108
Retirement Services
Premiums 26 673 389 9,163 1,163
Product charges 217 251 267 622 756
Net investment income 3,166 3,804 4,101 8,726 11,481
Investment related gains (losses) (2,624) (134) 1,539 (1,193) 3,082
Revenues of consolidated variable interest entities 318 366 552 946 1,329
Other revenues 563 4 3 583 9
Total Revenues 2,595 6,018 7,773 21,598 20,831
Expenses
Asset Management
Compensation and benefits (557) (604) (605) (1,743) (1,876)
Interest expense (36) (53) (55) (98) (159)
General, administrative and other (220) (319) (326) (643) (885)
Retirement Services
Interest sensitive contract benefits (333) (1,824) (2,599) (3,634) (7,307)
Future policy and other policy benefits (368) (1,095) (793) (10,346) (2,431)
Market risk benefits remeasurement gains (losses) 441 16 (524) 166 (354)
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (211) (227) (244) (502) (678)
Policy and other operating expenses (467) (478) (670) (1,356) (1,601)
Total Expenses (1,751) (4,584) (5,816) (18,156) (15,291)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities (32) (21) 15 (14) 33
Net gains (losses) from investment activities of consolidated variable interest entities 49 1 44 95 70
Other income (loss), net 22 24 70 102 68
Total Other Income (Loss) 39 4 129 183 171
Income (loss) before income tax (provision) benefit 883 1,438 2,086 3,625 5,711
Income tax (provision) benefit (243) (261) (317) (697) (1,000)
Net income (loss) 640 1,177 1,769 2,928 4,711
Net (income) loss attributable to non-controlling interests 42 (324) (958) (637) (1,620)
Net income (loss) attributable to Apollo Global Management, Inc. 682 853 811 2,291 3,091
Preferred stock dividends (22) (25) (24) (22) (73)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $660 $828 $787 $2,269 $3,018
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $1.10 $1.36 $1.30 $3.77 $4.96
Net income (loss) attributable to Common Stockholders - Diluted $1.10 $1.35 $1.29 $3.75 $4.94
Weighted average shares outstanding – Basic 579 587 585 581 587
Weighted average shares outstanding – Diluted 579 590 589 582 590

That said, Apollo could become even more profitable. Two-thirds of Apollo's earnings come from the Retirement Services Segment, where there is 430 billion USD of so called perpetual capital from the total of 733 billion USDs of assets Apollo manages. Plowing larger part of Apollo's long-term capital from its insurance business into the profitable private equity and credit investment management businesses of Apollo could unlock tens of billions of USDs of value for Apollo.

In short, Apollo is riding the wave of private capital harboring a lot of unlocked value.

Private Equity Firms Are Undervalued

 

The private capital markets show remarkable strength. Many technology startups, even mid-sized growth and even large firms from the technology and other sectors remain private for longer because they can tap private capital markets to raise capital for future growth. The main financiers of private capital markets are the leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms.

One way to model the leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms is to put in the average investment return of the Standard and Poor's 500 index for the last 20 years, according to Wolfteam Ltd.'s projections and estimates

Wall Street equity research analysts put in 0, zero for investment returns of the leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms, when they model out their earnings statement, balance sheet and cash flow statement in order to value them. On the contrary, the leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms have constantly produced returns even better than the Standard and Poor's 500 index for the last 20 years on average. One reason is the huge capital inflows into capital markets in search of better yield.

Assuming the leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms will produce earnings not worse than the average return of the Standard and Poor's 500 index for the last 20 years is not a far-fetched assumption, in Wolfteam Ltd.'s view.

By modelling out the leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms' future investment returns as 0, zero Wall Street equity research analysts undervalue private equity firms, in Wolfteam Ltd.'s view. 

The leading private equity investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC and other mid-sized and small private equity firms are undervalued by no less than 55 % on average by both public and private markets, according to Wolfteam Ltd.'s projections and estimates.

KKR Is Undervalued

  

KKR & Co, the alternative asset management firm that is also a leader in private equity is undervalued, according to Wolfteam Ltd.'s projections and estimates.

KKR's intrinsic value is 250 billion USD, compared with KKR's market capitalization of 137.62 billion USD, in Wolfteam Ltd.'s view.

Wall Street equity research analysts, when they issue 'Buy', 'Sell' or 'Hold' recommendations model out 0, zero return in their MS Excel models of the income statement, balance sheet and cash flows for Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. and other  leading private equity, real estate and credit firms, when Wall Street equity research analysts attempt to value the private equity firms.

History has shown that Wall Street equity research professionals' assumption of Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc., also of middle sized and small private equity firms that they make 0, zero return on their investments is erroneous.

On the contrary, Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. do make returns on their private equity investments, many a years beating the yearly return of the Standard and Poor's 500 index.

KKR has a growth oriented portfolio as large part of its private equity, real estate and credit and lending assets under management are invested in technology companies, artificial intelligence, AI real estate infrastructure and credit and lending CLOs, CDOs encompassing loans made for the buy out of technology companies.

Since we are living in the fourth industrial revolution or artificial intelligence, AI one can safely assume that in the next 2 to 5 years KKR will continue to earn outsized returns on its investment portfolio.

That is what chiefly makes KKR undervalued.

Blackstone Is Undervalued

Blackstone, the alternative asset manager is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Blackstone's intrinsic value is 370 billion USD, in Wolfteam Ltd.'s view compared with Blackstone's current market capitalization of 213.58 billion USD.

Wall Street equity research analysts, who on their part exert significant influence on security prices put in 0, zero for return on investment in their Microsoft Excel models of the income statement, balance sheet and cash flows with which they in end effect value large alternative asset managers with large private equity businesses like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. Wall Street equity research analysts assume large private equity, real estate and credit investment management firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc., medium and small private equity investment management firms will not make returns on their investments.

On the contrary, history has shown that especially the large private equity investment management firms Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc., but also mid sized and small private equity, real estate and credit investment management firms do make returns on their investment portfolios. Not only Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. make returns on their private equity, real estate and credit investments, but they also frequently beat the Standard and Poor's 500 return in many years, especially in their private equity investment management businesses.

That is why Blackstone is undervalued and could unlock more than 150 billions USD of value.

M&A And IPOs Are Very Profitable IB Business Lines. In 2025 A Revival Of M&A And IPOs Is Expected

Mergers and Acquisitions advisory and equity underwriting are investment banking most profitable business lines, outside of equity and bond trading and a medium mergers and acquisitions and IPOs revival is expected in 2025, according to Wolfteam Ltd.'s analysis.

High interest rates, antitrust actions and heavy regulations put on the brakes for mergers and acquisitions deals in 2024, when they recovered only 10 % higher from the suppressed levels of 2023.

Mergers and acquisitions deals and Initial Public Offerings, IPOs, equity underwriting fell in 2022 and 2023 from the historic highs of 2021. Mergers and acquisitions and Initial Public Offerings, IPOs, equity underwriting are precursors of strong business activity. Strong deal flow of mergers and acquisitions and Initial Public Offerings, IPOs, equity underwriting are needed to grease the economic machine so bond underwriting, equity and debt trading could switch into full gear.

Many leading investment bankers expect strong 2025 for IPOs and also robust mergers and acquisitions activity, according to various internet interviews and news articles. Mergers and acquisitions activity is expected to bounce 10 %, while IPO's volume is to increase 20 % from the levels in 2024.

Mergers and acquisitions and Initial Public Offerings, IPOs, equity underwriting are profitable investment banking business lines which are needed to speed up deal making and oil economic activity.

Light-touch regulation expected from President Donald Trump's administration is widely expected to increase deal making, so mergers and acquisitions and Initial Public Offerings, IPOs, equity underwriting could start growing again.

Leading investment bankers expect a revival of large, above 10 billion USDs in single deals deal making, especially.

Apple Will Tend To Remain The World's Most Valuable Company

 

Apple will tend to remain the world's most valuable company in 2025 according to Wolfteam Ltd.'s projections and estimates.

Wall Street equity research analysts are concentrating on NVIDIA as the main vehicle for artificial intelligence, AI and forecast NVIDIA will tend to be the world's most valuable company by market capitalization. Many Wall Street equity research analysts, according to media interviews seem to thing that Apple's iPhone renewal cycle could slow down. Actually iPhone are expected to fall in the first half of 2025 analyst Ming-Chi Kuo forecasts in an interview.

Apple’s estimated iPhone shipments total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo wrote. That is “below the market consensus of 240 million or more,” he wrote.'

Actually, Wolfteam Ltd.'s corporate view agrees with Wall Street which envisages a higher consensus of 240 iPhone shipments for 2024.

Apple's Macintosh,  iPhone, and iPad offering will continue driving and hosting artificial intelligence, AI innovation, according to Wolfteam Ltd.'s projections and estimates. Apple's unification of software and hardware makes for generally very good performance of artificial intelligence, AI task which appeals to users. Many Windows and Android devices match Apple's Macintosh,  iPhone, and iPad offering and the altogether effect of the hardware computing giants will enrich AI and make users buy more Apple, Windows and Android devices in the future.

The artificial intelligence, AI tide will lift all boats, that is and a strong Apple's iPhone and iPad renewal cycles could solidify Apple's position as the world's most valuable company in terms of market capitalization, in Wolfteam Ltd.'s view.

Blackstone Holds Huge Unlocked Value

 

Blackstone Inc, the alternative asset management firm holds tremendous unlocked value, according to Wolfteam Ltd.'s projections and estimates.

When Wall Street equity research analysts build three statement models of balance sheet, income statement and cash flows statement  of private equity firms like Blackstone, Wall Street equity research analysts usually put in 0, zero for the return on investment from the private equity, real estate and credit and lending funds giant alternative asset management firms like Blackstone manage.

History has shown that is not entirely true. Blackstone and other private equity fund management firms historically usually do make returns on the private equity, real estate and credit and lending investments they manage for institutional investors and individuals, as well as they do make returns on their proprietary investments as evidenced by Blackstone's third quarter 2024 earnings statement.

$ in thousands, except per share data) (unaudited) 3Q'23 3Q'24 3Q'23 YTD 3Q'24 YTD 3Q'23 LTM 3Q'24 LTM
Revenues
Management and Advisory Fees, Net 1,655,443$ 1,794,894$ 5,023,128$ 5,309,355$ 6,671,566$ 6,957,487$
Incentive Fees 158,801 191,794 454,754 559,434 665,018 799,851
Performance Allocations 390,486 1,569,673 894,647 3,322,003 841,443 2,959,529
Principal Investments 163,653 93,371 (782) 675,860 38,429 377,311
Interest and Dividend Revenue 109,133 109,774 348,123 312,612 450,755 480,986
Other 63,769 (96,312) 17,951 (31,861) (225,331) (142,741)
Total Revenues 2,541,285$ 3,663,194$ 6,737,821$ 10,147,403$ 8,441,880$ 11,432,423$
Expenses
Compensation and Benefits 946,186 1,440,344 2,769,892 3,954,850 3,429,221 4,497,928
General, Administrative and Other 279,186 340,945 827,614 1,022,823 1,119,954 1,312,514
Interest Expense 110,599 111,337 323,136 328,156 423,465 436,888
Fund Expenses 38,934 3,470 118,918 13,380 137,449 13,449
Total Expenses 1,374,905$ 1,896,096$ 4,039,560$ 5,319,209$ 5,110,089$ 6,260,779$
Other Income (Loss) (49,078)$ 42,842$ 104,373$ 70,009$ 73,038$ (118,361)$
Income Before Provision for Taxes 1,117,302$ 1,809,940$ 2,802,634$ 4,898,203$ 3,404,829$ 5,053,283$
Provision for Taxes 196,560 245,303 467,504 789,220 326,358 835,177
Net Income 920,742$ 1,564,637$ 2,335,130$ 4,108,983$ 3,078,471$ 4,218,106$
Redeemable NCI in Consolidated Entities (92,577) (22,184) (81,589) (61,595) (281,179) (225,524)
Non-Redeemable NCI in Consolidated Entities 461,325 805,986 1,177,639 2,097,943 1,562,716 2,219,195
Net Income Attributable to Blackstone Inc. (''BX'') 551,994$ 780,835$ 1,239,080$ 2,072,635$ 1,796,934$ 2,224,435$
Net Income Per Share of Common Stock, Basic 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91$
Net Income Per Share of Common Stock, Diluted 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91$
Blackstone | 2

BLACKSTONE’S THIRD QUARTER 2024 HIGHLIGHTS
▪ Fee Related Earnings (“FRE”) of $1.2 billion ($0.96/share) in the quarter
– FRE was $4.5 billion over the last twelve months (“LTM”) ($3.68/share)
▪ Distributable Earnings (“DE”) of $1.3 billion ($1.01/share) in the quarter
– DE was $5.2 billion over the LTM ($4.06/share)
▪ Net Accrued Performance Revenues of $7.0 billion ($5.72/share)
Financial Measures
▪ Total Assets Under Management (“AUM”) of $1,107.6 billion
– Fee-Earning AUM of $820.5 billion
– Perpetual Capital AUM of $434.7 billion
▪ Inflows of $40.5 billion in the quarter and $166.7 billion over the LTM
▪ Deployment of $34.0 billion in the quarter and $123.4 billion over the LTM
▪ Realizations of $22.7 billion in the quarter and $77.0 billion over the LTM

In addition, Blackstone manages 434.7 billion USDs of so called perpetual capital from the total fee-earning assets under management of 820.5 billion USD and total assets under management of 1 107.6 billion USD. 434.7 billion USDs are so called perpetual capital, because this capital stems from the insurance fees Blackstone collects from its proprietary insurance business line and such capital can be really invested for the long-term. That is, the perpetual capital can be invested for more than 8-10 years which is the usual term the money that Blackstone collects and manages for institutional investors and individuals has to be invested and exited.

Blackstone's intrinsic value is 340 billion USD compared with its current market capitalization of 199. 94 billion USD, according to Wolfteam Ltd.'s projections and estimates

 

NVIDIA Valuation Scenarios

 

If artificial intelligence, AI explodes and goes on taking the world by storm, NVIDIA could end up being worth 12.7 trillion USD.

If artificial intelligence, AI's development stagnates NVIDIA will be worth 1.2 trillion USD.

If artificial intelligence, AI's development declines heavily or we enter AI winter NVIDIA's intrinsic value will be 550 billion USD.

All of the above is according to Wolfteam Ltd.'s estimates.

Apollo Is A Leader In Private Credit

 

Apollo Global Management's assets under management are 733 according to its third quarter 2024 report.

598 billlion or 85 % of Apollo Global Management's assets are in private credit.

That makes Apollo a leader in private credit investing globally, according to Wolfteam Ltd.'s estimates. Private credit is a hot area, which enhances the yield investors get. Apollo buys up high yield bonds company involved in leveraged buyouts issue, invests in CLOs, CDOs with some acumen to increase returns.

Many institutional investors are showing great interest in private credit investing. That is why the inflows to Apollo and Apollo's assets are growing constantly in the last few years.This is reflected in the 31.94 billion USDs in revenue Apollo achieved in 2023, a huge increase on the prior years. At 96.4 billion USD market capitalization Apollo still looks undervalued. The intrinsic value of Apollo is 154 billion USD, according to Wolfteam Ltd.'s projections and estimates.

Private credit returns as of late have been great, which further enhances the value Apollo Global Management carries. Private credit brings good risk adjusted yields, which institutional investors seek. 

In 2025 many Wall Street equity research and fixed income analysts expect a lively year for mergers and acquisitions, driven mainly by private equity's 'dry powder' investments. The envisaged new leveraged buyouts will again buoy the credit markets as companies undergoing leveraged buyout will issue new high yield debt, which funds like Apollo Global Management will invest in. In addition, the Federal Reserve is expected to continue cutting interest rates, which will support the high yield bonds market.

This will make private credit markets even deeper and liquid which will attract even more money.

Bitcoin's Price Could Exceed 200 000 USD in 2025

 

Bitcoin is still undervalued on global cryptocurrency adoption, looser regulation and institutional investors demand, according to Wolfteam Ltd.'s projections and estimates.

The incoming President Donald Trump's administration could create a perfect storm for Bitcoin's price to go above 200 000 USD, in Wolfteam Ltd.'s view.

 All institutional investors are looking for extra yield on their investments and many hedge funds, asset managers, endowments and even pension funds would be tempted to invest in Bitcoin mainly, but also in other currencies to keep their promises to their investors and capital providers.

In 2025 there could be many more Initial Public Offerings, IPOs which will increase the capital sent back to venture capital funds, which on their turn would plow the IPO recycled capital into new ventures, crypto ICOs also and feed the entrepreneurship machine. The turnover of capital could increase in 2025.

Apollo Global Management And Carlyle Group Comparison

 

 

Apollo Global Management, the private equity giant dwarfs in terms of market capitalization Carlyle Group, another private equity giant, according to Wolfteam Ltd.'s analysis.

Apollo's market capitalization is 101.44 billion USD compared with Carlyle's 18.54 billion USD market capitalization.

Apollo Global Management's revenue for the calendar 2023 is 31.94 billion USD, while Carlyle Goup Inc's revenue for the calendar 2023 is 2.42 billion USD which partly explains the large difference in the valuation of Apollo and Carlyle. Although Carlyle pays out a 2.70 % dividend yield and Apollo does not pay out any dividends at all, Apollo is much more valuable on the stock market.

Carlyle's assets under management are 447 billion USD according to its third quarter 2024 earnings statement, compared with Apollo's 733 billion USD assets under management according to Apollo's third quarter 2024 earnings statement.

Apollo's 85 % of assets under management are in credit assets, while 75 % of the fee earning assets under management of Carlyle are in global private equity. Since credit investing is a hot, popular area and Apollo's almost twice as large assets under management compared to Carlyle's helps explain why Apollo's market capitalization is 101.44 billion USD compared with Carlyle's 18.54 billion USD market capitalization.

Private Equity Giants Insurance Strategy

 

Circa 30 % - 40 % of the capital under management of the leading private equity firms Blackstone, KKR, Apollo, Carlyle is so called perpetual capital in the sense that it consists of insurance premiums fees from Blackstone, KKR, Apollo, Carlyle insurance businesses, according to Wolfteam Ltd.'s calculations

Such insurance capital provides for long-term capital appreciation opportunities. Blackstone, KKR, Apollo, Carlyle invest the insurance premium fees from their insurance lines in their private equity, real estate and credit and lending asset management businesses for long-term gains.

The US stock market seems to imply that Blackstone, KKR, Apollo, Carlyle will realize large returns from their investments as Blackstone, KKR, Apollo, Carlyle are trading at large, premium valuation multiples like Price/Earnings, Price/Sales, Price/Book ratios.