As AI prepares to shake up the global economy, investors have a new mantra: the Halo trade.
Interest in Halo, which stands for “heavy assets, low obsolescence,” is growing as investors seek companies with tangible, productive assets that could be protected from disruption by AI, such as energy and transportation infrastructure companies.
US tech giants had a tough start to 2026, but the Halo deal helped UK and EU stock markets rise to record levels by the end of February.
Goldman Sachs reported this week that its basket of more than 100 high-spending companies outperformed a similar group of capital-light companies by 35% from 2025 onwards, as “asset intensity is a key driver of valuations and returns.”
“After more than a decade of underinvestment (particularly in Europe), companies are beginning to decisively return to physical assets,” Goldman analysts told clients.
Goldman defined a Halo business as one that combines substantial physical capital (barriers to replication such as cost, regulation, construction time, and engineering complexity) with long-life economic relevance. “Examples include power grids, pipelines, utilities, transportation infrastructure, critical machinery, and long-cycle industrial capacity,” they said.
Their calculations show that the valuation gap between capital-intensive and capital-light companies in Europe has narrowed significantly, with capital-intensive companies valued more highly on a price-to-earnings ratio basis, a key measure of stock performance.
Ruben Dalfovo, investment strategist at Saxo, said examples of halo companies include energy infrastructure companies and oil and gas giants that control the entire supply chain, as well as companies such as utilities that “still need it on Monday morning.”
“Waste collection, water services, and regulated power grids are rarely the center of dinner party conversations. They tend to emerge when investors stop paying for excitement and start paying for reliability,” Dalfobo said.
The FTSE 100, which is relatively dominated by old economy companies, hit a series of new highs in 2026. February was the strongest month for the blue-chip index since November 2022, marking its eighth consecutive month of gains.
““Investors are shifting away from expensive AI and growth stocks to businesses with visible infrastructure and long-lived assets, such as energy, materials, industrials, shipping and other ‘real world’ companies,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
“In this context, the FTSE 100 has risen from record to record, driven by energy and mining names, and is well placed to benefit from the Halo influx,” Ozkardeskaya added.
The pan-European Stoxx 600 stock index also hit a record high last week, helped by rotation away from U.S. tech stocks and into other sectors.
Cyprus-based oil tanker shipping company Frontline has been the best-performing member of the Stoxx 600 so far this year, up 57%. Norway’s Kongsberg Gruppen, which sells high-tech systems to marine, aerospace, defense and energy producers, is up 46% since early January.
By contrast, software and data-focused companies have come under pressure in recent weeks as AI companies add services that threaten their revenue models.
Last week, analysts at Citrini Research set the market on fire with a speculative report outlining a future in which autonomous AI systems will upend the entire U.S. economy, from jobs to markets to mortgages, increase unemployment and hurt the stock market.
