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THE HALO EFFECT: INVESTORS ROTATING TOWARD PHYSICAL ASSETS
A rotation toward capital‑intensive sectors is reshaping leadership across equity markets, Goldman Sachs strategists led by Guillaume Jaisson say, as investors reprice the value of physical assets over digital businesses threatened by AI disruption risks.
Higher real yields, geopolitical fragmentation and supply‑chain rewiring are pushing markets to reward capacity, networks and engineering complexity – assets that are costly to replicate and less exposed to technological obsolescence.
AI is adding pressure by challenging margins and terminal values in Software and IT Services, while turning long‑time “capital‑light” winners into some of the largest capital spenders in history, the strategists add.
Goldman highlights its HALO – Heavy Assets, Low Obsolescence – theme, covering grids, pipelines, utilities, transport infrastructure, critical machinery and long‑cycle industrial capacity.
Flows increasingly favour heavy‑asset sectors, the bank says, “but long‑term allocations remain far from stretched,” suggesting further room for rotation.
Its basket of capital-intensive stocks has outperformed capital‑light shares by 35% since 2025, with earnings momentum now shifting towards heavy‑asset businesses.
(Danilo Masoni)
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EARLIER ON LIVE MARKETS:
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How US markets have performed over the past year https://www.reuters.com/graphics/AUTOMATED-20260223/US-INDEX-COMPARISON-365D/egpbenbqrvq/chart.png