By Paul R. La Monica

Investors fleeing hard-hit software companies are taking comfort in stocks that might not get disrupted as much by the artificial-intelligence revolution. It seems to be paying off, according to Goldman Sachs.

These so-called HALO firms -- heavy assets and low obsolescence -- rely heavily on big investments to produce goods or services that won't become irrelevant in the age of AI. Think industries like aerospace, autos, food and beverages, and semiconductors. They have become havens as the meltdown in software-as-a-service (SaaS) stocks -- "the SaaS-pocalypse" -- continues.

Analysts at Goldman Sachs noted in a report Tuesday that a basket of European companies it considers capital-intensive has outperformed capital-light stocks -- in industries such as media, retail, business services, and software -- by 35% since 2025.

Airbus, BMW, Volkswagen, Nestle, Diageo, and ASML were some of the companies in Goldman's capital-intensive basket. Meanwhile, software companies SAP, Dassault Systems, and Sage Group were among the capital-light stocks.

In the past, the capital-light stocks tended to trade at a premium multiple compared with companies requiring more capital, Goldman noted. The rationale was that software firms benefited from having fewer heavy assets on their balance sheets.

But that may no longer be the case. Now, software firms are being hurt by worries that Anthropic's Claude, OpenAI's ChatGPT, and Alphabet's Gemini could replace them.

"The two baskets now trade almost in line as investors reprice resilience and the strategic value of real-economy assets," the Goldman analysts wrote.

"Markets are rewarding capacity, networks, infrastructure and engineering complexity -- assets that are costly to replicate," the Goldman analysts added.

Goldman did not identify U.S. stocks in their report. But it's not hard to find American counterparts that are also benefiting from the HALO trade. Airbus rival Boeing, for example, has gained 8% this year and is up more than 30% over the past 12 months.

Food and beverage stocks such as Coca-Cola, Pepsi, Mondelez, and Hershey have surged between 13% and 25% so far this year. General Motors and Ford have far outpaced the broader market's gains during the past 12 months too.

And then there are chip stocks. ASML's American counterparts have thrived while software stocks have been decimated. The iShares Semiconductor exchange-traded fund is up more than 20% this year alone and over 65% during the past 12 months, thanks to gains for companies like Micron and Advanced Micro Devices, as well as chip equipment firms Applied Materials and Lam Research.

As the use of AI becomes even more prevalent in the economy and labor force, new stock market winners may emerge. Tech stocks, particularly software companies, might no longer deserve a lavish premium. Investors need to be digging deeper to find good values.

"Some tech stocks are trading at 50 times revenues due largely to the 'AI halo' effect, even though they have limited revenues or products and services that may not even be deployed until 2030," said Janus Henderson portfolio managers Denny Fish, John Lloyd, and John Kerschner in a report this week.

"AI disruption will not be linear," they added, arguing that investors will need to be selective and look for potential AI winners across a variety of sectors.

So the HALO rally may have only just begun, noted Eugenia Mykuliak, founder and executive director with B2PRIME Group, a global financial services provider for institutional clients, in a report.

"The HALO trade situation is real," she wrote, adding that "when a technology cycle goes through such a major acceleration as AI has in the past couple of years, it makes sense that markets will want to cool down after a while."

"After a long period of AI enthusiasm, capital needs some diversification. So it seeks hard assets and non-digital, non-AI-related sectors as the ones with the most perceived stability," she said.

Don't be surprised then to see investors continuing to embrace the hard-asset companies for the foreseeable future. The HALO trade might turn out to be a crown for the stocks that face fewer AI disruption risks.

Write to Paul R. La Monica at paul.lamonica@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.

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February 24, 2026 15:01 ET (20:01 GMT)

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