Report Date: Friday, July 31, 2026 (before market open) | Current Price: ~$124 (as of 7/30/26 close)
Ares reports second-quarter 2026 results tomorrow morning. The print comes after a volatile year for the stock — ARES entered 2026 near $170-176, plunged to roughly $96-100 in March amid market-wide anxiety over private-credit exposure to software/AI disruption risk, and has since rebuilt to the mid-$120s. The setup into this quarter is mixed: strong topline/fundraising momentum should continue, a pre-announced performance-income beat is already in hand, but investors will be watching closely for signs of credit normalization (following soft read-throughs from sister-company Ares Capital's print two days ago) and for any update on a potentially transformative M&A deal for Leonard Green & Partners.
Consensus has moved higher into the print, reflecting confidence in Ares' fee-earnings machine:
Important pre-announced item: On July 10, Ares furnished an 8-K disclosing that it "preliminarily expects realized net performance income for the quarter ending June 30, 2026 to be in excess of $50 million, compared to $16 million in realized net performance income for the quarter ended June 30, 2025" — a greater than 3x year-over-year jump that should provide a meaningful tailwind to realized income and after-tax EPS this quarter, though management cautioned actual results could differ materially from this preliminary estimate.
Ares' first-quarter results, reported May 1, set a high bar of momentum:
1. Credit quality / software exposure — the market's biggest fear. This has been the dominant overhang on the stock all year. A court filing tied to a shareholder suit against ARCC noted that Ares Management's stock "declined 6.2% in 2025 and 31.6% during the first quarter of 2026 as a result of Ares Management's exposure to software and related artificial intelligence ('AI') fears." On the Q1 call, management leaned hard into defending the book — commissioning an independent consultant review that found roughly 86% of its software-oriented direct-lending portfolio was low-risk of AI disruption, with loans senior in the capital structure at ~40% LTV. Investors will want an update on whether that thesis is holding.
The read-through from ARCC's Q2 print (July 29, which beats consensus modestly) was mixed: core EPS met estimates at $0.47, but non-accruals rose to 2.4% from 2.1%, though leverage stayed steady at 1.12x with $6 billion of liquidity available, and the portfolio experienced net negative originations for the first time in recent quarters, alongside NAV per share declining to $19.35 from $19.94 at year-end 2025. Management on that call struck a cautiously constructive tone, noting deal activity is expected to improve as the market continues to thaw, with larger transactions becoming more common, alongside continued normalization in credit metrics across the industry. Ares' own Q2 commentary on nonaccruals, loan-to-value trends, and any incremental softness in direct lending will be a focal point.
2. Fundraising and deployment cadence. Watch whether the record institutional fundraising pace (ASOF III, alternative credit, senior direct lending vintages) continued into Q2, and whether U.S. direct-lending deployment — which slowed in Q1 due to weak middle-market M&A — reaccelerated as management suggested was already happening "over the past several weeks" as of the Q1 call.
3. Wealth-channel redemptions. Non-traded BDC flows moderated in Q1 (95%+ of investors did not redeem, but repurchase requests picked up among smaller institutions/family offices). Any further deceleration — or stabilization — in the two U.S. private-credit retail vehicles (~4.5% of FPAUM) will matter for the fundraising narrative, even though management argues the earnings impact is minimal since capital simply migrates to institutional vehicles.
4. FRE margin trajectory and the data-center/digital-infrastructure build. Management guided to the high end of its 0-150bps FRE margin expansion range for the year, helped by the GCP integration and the digital infrastructure business flipping from an FRE drag to a contributor as its new global data-center fund holds its first close (targeted for "this summer").
5. Leonard Green & Partners talks — a potential strategic pivot. The most significant recent headline: Ares Management has held discussions over a potential acquisition of buyout firm Leonard Green & Partners in a deal that would significantly expand its private equity platform and accelerate consolidation across the private markets industry. The rationale is scale-driven — Ares reports that over 65% of its $644 billion in AUM is in private credit, while another 22% is in real assets, and only 4% is in private equity — and while Ares oversees approximately $644bn in AUM, only around $25bn is invested through its private equity strategies; Leonard Green manages roughly $85bn, meaning a combination would more than quadruple Ares' buyout assets. No deal has been signed and both firms declined to comment, but expect at least one analyst question on strategic M&A appetite and PE segment ambitions on tomorrow's call.
6. Realized income cadence. With the pre-announced >$50 million realized net performance income figure already in hand (vs. $16 million a year ago), CFO Jarrod Phillips previously flagged that realization timing is lumpy and transaction-dependent (European waterfall structures continue accruing value even when deal timing slips), so investors should focus on the full-year trajectory rather than any single quarter's beat/miss.
ARES shares have been unusually volatile in 2026 — falling from the $170s in January to a 2026 low near $96.50 in mid-March (coinciding with peak software/AI credit anxiety and broader macro turbulence), before staging a recovery into the $130s by June, dipping again to the $107-113 range in late June, and grinding back to ~$124-128 heading into earnings. That round-trip suggests the market remains sensitive to any incremental credit-quality data point, even as the underlying fee-earnings growth story has stayed intact.
Ares should deliver another quarter of strong headline growth in management fees, FRE, and AUM, aided by a pre-flagged performance-income beat. The key swing factors for the stock reaction are likely to be: (1) whether direct-lending/software credit metrics show the stabilization management has been promising rather than the modest deterioration ARCC just reported; (2) commentary on fundraising momentum and wealth-channel redemption trends; and (3) any incremental color on the Leonard Green talks, which — if it progresses — would mark one of the largest strategic shifts in Ares' history by meaningfully scaling up its underweight private equity business.