"AI disrupting everything" sweeping through the stock market, where is the safe haven? Goldman Sachs gives the keyword: HALO

The strategy analysts of the Wall Street financial giant Goldman Sachs Group Inc. released a research report stating that the stock prices of heavy asset companies with tangible production assets are significantly outperforming the global stock market. This is mainly because global investors, including hedge funds and individual investors, are actively seeking safe havens to avoid the "everything disrupted by artificial intelligence" sell-off storm. Therefore, investors are turning their investment focus to those heavy asset-intensive HALO (Heavy Assets, Low Obsolescence, focusing on heavy assets with low AI obsolescence risk) stocks. The Goldman Sachs research team indicated that since the beginning of 2025, their compiled "heavy asset-intensive" stock basket - whose economic value comes from physical assets or physical production materials - has significantly outperformed the "light capital-intensive" stock benchmark by about 35%. The "HALO effect" cited by Goldman in the research report does not refer to the common "halo effect" in psychology, but rather to companies whose value primarily comes from high-cost, long-life physical assets/core capabilities/manufacturing networks/infrastructure. Therefore, investors consider them less prone to rapid AI replacement or "technological obsolescence" and more likely to receive a "safe haven premium" in times of increasing AI anxiety. Typical characteristics include heavy asset barriers to production materials, such as power grids/mines/oil and gas assets/large utility networks, key AI infrastructure manufacturers, etc. The replication cost of AI in these areas is extremely high, and human technological value is difficult for AI to surpass. Another characteristic is low technological obsolescence rate, which refers to core capabilities that are difficult for AI to completely replace in the short term, even with advances in AI technology. Human technological value is also difficult for AI to surpass, such as semiconductor equipment supply chains, chip manufacturing, advanced chip packaging and testing technologies, and other technological processes. AI is not only "destroying" the profit structure of some light asset industries, but also creating a real-world "super cycle of capital expenditure" - such as the AI chip and storage chip super cycle. Goldman estimates that the five major "super large cloud providers" will invest approximately $1.5 trillion in AI infrastructure from 2023 to 2026, transforming themselves from traditional "capital light winners" to "capital-intensive players". HALO Effect Goldman Sachs research team, including strategists like Guillaume Jaisson, stated in this client report that investors are increasingly turning to heavy asset stocks with what they call the "HALO effect" - stocks with extremely heavy and low AI obsolescence risk assets, which are mainly concentrated in traditional manufacturing industries such as utilities, basic resources, chip manufacturing, semiconductor equipment manufacturing, and energy. "The market is rewarding capacity, high-density manufacturing networks, infrastructure, and extremely complex manufacturing project engineering - these assets have extremely high replication costs and require substantial investment in 'trial-and-error' processing or production experiments using AI systems. Therefore, they are less likely to be impacted by AI technological obsolescence," wrote the Goldman Sachs strategists. As shown in the chart above, heavy capital-intensive stocks are significantly outperforming the market, with real-world assets performing well while sectors such as software and other light asset industries perceived to face "AI disruption risk" experience significant declines. The data is standardized by percentage increase as of December 31, 2024. The anxiety over AI applications disrupting all traditional business models has engulfed many large industries, from SaaS software to wealth consulting and management, as well as real estate consulting, leading to significant declines in stocks previously considered to be "inevitable AI winners". This extreme concern about "AI disrupting everything" has evolved into indiscriminate and irrational selling, spreading to industries seemingly less affected by AI risks, such as labor-intensive logistics and transportation. Some "heavy asset-intensive" companies are also underperforming Goldman's strategists stated that the competition for AI leadership has transformed the previously long-term outperformers in light asset markets - the so-called five "super large cloud computing service providers" (hyperscalers) - into trading targets for heavy asset-intensive stocks. However, the massive AI capital expenditure closely related to the construction wave of AI data centers has led to continuous price declines for these companies, primarily because investors are beginning to question whether the continued massive investment in AI computing infrastructure (with AI capital spending by the four major US tech giants expected to exceed $700 billion this year, representing a 60% increase) can generate a strong enough return to support their high valuations. The strategists estimated that these large tech companies - Amazon, Microsoft, Google parent company Alphabet Inc., Facebook parent company Meta Platforms Inc., and Oracle - are expected to invest approximately $1.5 trillion between 2023 and 2026 to build an immense AI computing infrastructure. In comparison, these companies had accumulated investments of approximately $600 billion throughout their entire historical statistical period before 2022. The Goldman Sachs team stated that higher actual returns on investment, as well as geopolitical factors driving increased fiscal expenditure and manufacturing support, are supporting the migration of funds to capital-intensive market sectors. They also pointed out that profit momentum is shifting towards these long-time heavy asset stocks: the significantly higher expected earnings per share (EPS) growth and return on equity (ROE) in these capital-intensive companies are now significantly higher than in light capital companies. Another financial giant, Morgan Stanley, also stated that the market is moving away from sectors with light assets such as software. Strategists at Morgan Stanley wrote in a report on Monday that some long-time Euro-only funds had already begun to reduce their position allocation to SaaS-type software stocks facing AI disruption risks by the end of 2025.