By Martin Baccardax

You won't get a burger from a chatbot, receive a package from an artificial intelligence-coded program, drink an icy cold Coke with the help of a data center or plow a field with large language model.

Frontier AI companies may yet find a way to translate the new technology into a tactile experience, but until they can, investors are looking to buy companies that make things we can consume in the real world -- and dumping companies that don't.

Ed Yardeni says this can be traced back to late October, when "Big Short" investor Michael Burry "raised several questions on social media about whether all the investment in AI infrastructure will ever pay off."

"More recently, they have been seeking to invest in companies with AI immunity after software stocks were pummeled by fears that AI would threaten their profitable business models," he added.

Josh Brown, CEO of Ritholtz Wealth Management, calls them HALO stocks, a term he said reflects their AI immunity: Heavy Assets, Low Obsolescence.

"You keep hearing people talk about rotation, and investors going from growth to value, but that doesn't reflect what's actually happening here, " he said on a recent episode of his The Compound and Friends podcast. "HALO stocks could be either or both."

"HALO stocks obey a very simple litmus test: can an LLM replicate what this company makes or sells or can it not?," he said. "People are looking at their holdings and saying 'is Anthropic about to end this company's life.' And if you an answer 'no,' that's where money is being allocated."

The S&P 500 Consumer Staples sector index is up 16.5% over the past three months, while the Materials sector has gained 16.8% and the energy sector has gained just over 20%.

The broader S&P 500 benchmark, meanwhile, has only edged 0.15% higher over the same time frame.

Individual stocks are also making the HALO stock case.

McDonald's shares rose 2.4% on Thursday, extending their three month advance to around 10.5%, following a better-than-expected set of fourth quarter earnings from the world's biggest restaurant chain.

U.S. sales were up 6.8% over the three months ended in December, the most in two years, as the group narrowed its focus to affordable menu items for cash-strapped diners.

AI can't cook

FedEx shares have risen nearly 40% over the past three months, and 28% since the start of the year, as the package delivery giant continues to benefit from a resilient domestic economy and a ruthless cost-cutting effort. Rival UPS is up 24% over the same time frame.

AI doesn't deliver.

Coca-Cola and its soda and snacks making rival PepsiCo are up 12% and 20% since early November, thanks in part to stronger than expected sales volumes and, it has to be said, a lack of potential disruption from the next AI genie that comes out of the bottle. AI can't pour.

Caterpillar, the old-school maker of heavy industrial and agriculture equipment, is the best-performing stock on the Dow Jones Industrial Average so far this year with a 28% gain. It has also contributed around 80% of the Average's 1500 point gain and is the principal reason it topped the 50,000 mark earlier this month.

It won't be disrupted by AI...but it will play a crucial role in delivering it.

"What often gets overlooked is that AI is fundamentally an industrial story. None of this works without power -- and that power needs to be reliable," said Brian Sponheimer, research analyst and portfolio manager, Gabelli Funds. "As a supplier of diesel and gas generators, Caterpillar serves as the last line of defense when the grid fails."

That twin benefit is also evident in the bull case for HALO stocks, which are expected to get a boost from AI technologies that help with efficiencies and logistics.

Data from Torsten Sløk at Apollo Global, however, suggests that hasn't arrived as yet, and profit margins for those outside of the tech space have yet to show meaningful gains over the past three years.

Still, the steady bet in the market seems to be focused on companies that aren't going to find themselves flattened by the AI steamroller. And they're the ones wearing the HALO.

Write to Martin Baccardax at martin.baccardax@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 12, 2026 14:19 ET (19:19 GMT)

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