This year, an investment theme known as the &#34;HALO Trade&#34; has quietly gained momentum on Wall Street.
According to The Financial Times of the UK, the concept was proposed by Josh Brown, CEO of New York-based Ritholtz Wealth Management. It stands for Heavy Assets, Low Obsolescence—meaning heavy assets and low rates of obsolescence.
Its core logic is straightforward: AI can replace programmers, analysts, and even entire software systems, but it cannot replace a refinery, a transmission grid, or a copper mine.
<h2>What Are HALO Companies?</h2>
HALO companies share common characteristics: they possess significant fixed physical assets that form insurmountable barriers to entry.
Typical representatives include: electric utilities (such as Italy's Enel), mining firms (such as Rio Tinto), energy companies (such as Shell), and chip manufacturers—TSMC has had average annual capital expenditures of $32 billion since 2020.
Goldman Sachs European strategist Guillaume Jaisson provided quantitative criteria in a research report: the ratio of fixed assets to total assets, tangible assets per employee, and capital expenditure relative to sales—the higher the score, the stronger the &#34;HALO&#34; attribute.
In contrast are typical victims of &#34;non-HALO&#34; dynamics: SaaS software companies whose code can be rapidly replicated by AI; property platform Rightmove, which saw its stock price fall 25% at one point late last year; financial planners' advice, which can be directly scraped from the internet by AI—all these industries faced selling pressure over the past year.
<h2>Heavy Asset Sectors Outperform Broad Market This Year</h2>
Market performance is already validating this logic.
In the MSCI Global Price Index, utilities, mining, and energy sectors have all outperformed broad market indices this year—and this outperformance appeared well before the outbreak of the Iran war in March and the subsequent surge in oil prices.
South Korea's Doosan Group presents an extreme case. This engineering group, which builds seawater desalination plants, saw its stock price rise more than 70% in dollar terms this year.
By contrast, hyperscale cloud companies once seen as beneficiaries of AI have experienced divergence. According to JPMorgan data, from the release of ChatGPT in 2022 through 2025, major cloud providers including Amazon, Google, Meta, and Oracle have collectively committed to capital expenditures totaling $1.3 trillion.
But the market remains unconvinced. Concerns about potential oversupply in data centers have dragged down the stock prices of Oracle and Microsoft, causing them to fall more than the broader market and more than peer technology companies this year.
<h2>Valuation Discount Narrows: How Far Can the Theme Go?</h2>
This is the question currently occupying investors' minds.
A year ago, European HALO stocks traded at a 35% discount in price-to-earnings multiples compared to light-asset companies. According to Goldman Sachs' Jaisson, this discount has now essentially disappeared.
Yet Jaisson remains optimistic. He believes earnings growth will drive the next phase: &#34;The gap in earnings-per-share growth continues to widen, and HALO stocks delivered strong results in the latest earnings season. Market focus is shifting to first-quarter earnings; early signs are positive, and improved corporate guidance has pushed consensus estimates higher.&#34;
However, not everyone agrees. Patrick Kaser of Brandywine Global stated: &#34;I broadly agree with the HALO logic, but at this point, I believe it is no longer an investable theme with an attractive risk-return profile.&#34;
<h2>A Deeper Narrative: De-Americanization and &#34;Scarcity&#34;</h2>
Behind the HALO theme lies another, more macro-level narrative line.
Julien Albertini, portfolio manager of the First Eagle Global Value Fund with $72 billion in assets under management, argues that the U.S. stock market no longer provides &#34;effective exposure to the real economy.&#34; He points out that the proportion of corporate investment spending relative to cash flow in U.S. companies has fallen from 65%-70% in the early 1990s to below 40% in this decade.
&#34;This marks the end of 'Pax Americana,'&#34; Albertini said. &#34;Europe now needs strategic autonomy—energy security, defense, supply chain resilience. This affects inflation and fiscal deficits, which in turn influences stock portfolio selection.&#34;
For him, the core issue is &#34;scarcity&#34;: Does this company offer products or services that others do not?
Sebastian Raedler, head of European equity strategy at Bank of America, approaches the issue from another angle. He warns that as &#34;agentic AI&#34; spreads rapidly in China—where AI robots automatically complete search and purchasing behaviors—Western economies may face a similar overcapacity dilemma, ultimately leading to a contraction in consumer demand.
&#34;Trade surpluses mean 'free-riding' on other countries' final demand,&#34; Raedler said. &#34;This is precisely where the HALO theme comes into play—the market needs business models with shorter terminal value horizons.&#34; In other words, companies that generate profits in the near term rather than relying on distant future profit promises.
<h2>A New Factor or Old Wine in a New Bottle?</h2>
Some compare HALO to the &#34;New Economy vs. Old Economy&#34; narrative during the 1990s tech bubble—when value stocks were trampled by growth stocks, and now the situation has reversed.
Brown disagrees. He emphasizes that HALO is not simply a &#34;return of the old economy,&#34; because the theme also includes technology companies like semiconductors that continue to make high-intensity investments.
His judgment is clearer: &#34;I believe this represents the birth of a new investment factor in the AI era. Before buying a company, investors must consider how 'HALO-like' it is.&#34;
Alec Cutler, portfolio manager of the Orbis Global Balanced Fund, adds a geopolitical perspective: He favors companies reflecting trends of &#34;fundamental demand and a global shift toward national interests,&#34; specifically pointing to energy, utilities, and heavy industry—rather than the luxury sector, which also suffered heavily over the past year.
First Eagle's Albertini sees opportunities in active management: &#34;We are seeing broader divergence across sectors and regions, which is very exciting for active fund managers.&#34;
The Financial Times concludes that, in the long run, investor acceptance of the HALO theme requires two conditions:
First, individual stock valuations must not diverge severely from earnings growth; second, the threat of AI disruption must continue to suppress companies lacking a heavy-asset &#34;moat.&#34;
At its core, stock investors over the past year have been actively seeking undervalued opportunities in the market—whether or not they carry the &#34;HALO&#34; label. This shift from an AI-driven one-way bull market to diversified rotation is itself a signal.

The "HALO Trade"—where utilities, mining, and energy sectors have significantly outperformed the broader market this year, becoming a current market focus. This reflects a deeper global macro shift toward "de-Americanization": hard assets that truly control the real economy are capital's most stable card. However, with the valuation discount between HALO stocks and light-asset stocks narrowing from 35% to near zero, institutions warn that their risk-return profile is no longer attractive

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Enel

Rio Tinto

Rio Tinto Limited

Shell

Taiwan Semiconductor

Goldman Sachs

Rightmove plc

MSCI

JPMorgan Chase

Amazon

Alphabet

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Meta Platforms

Oracle

Microsoft

BrandywineGLOBAL Global Income Opportunity Fd

First Eagle Overseas Equity ETF

Bank of America

ORBIS AG

Rio Tinto plc

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"HALO Trade": A Fleeting Phenomenon or the Inevitable Trend?