"Goldman defined Halo businesses as ones which pair substantial physical capital (where barriers to replication include cost, regulation, time to build or engineering complexity) with long-lived economic relevance. Examples include grids, pipelines, utilities, transport infrastructure, critical machinery and long cycle industrial capacity."
"Goldman Sachs reported this week that its basket of more than 100 big-spending companies had outperformed a similar grouping of capital-light firms by 35% since 2025, as asset intensity becomes a key driver of valuations and returns."
"Waste collection, water services and regulated power networks rarely dominate dinner party chat. They tend to show up when investors stop paying for excitement and start paying for reliability."
The Halo trade represents a strategic investment shift toward companies with substantial tangible assets that are resistant to AI disruption. These businesses combine significant physical capital with long-term economic relevance, including energy infrastructure, utilities, transport networks, and regulated services. Goldman Sachs reports that capital-intensive companies have outperformed capital-light firms by 35% since 2025, reflecting changing valuation dynamics. After over a decade of underinvestment, corporations are redirecting focus toward physical assets. The valuation gap between capital-intensive and capital-light businesses in Europe has narrowed, with capital-intensive firms now commanding higher price-to-earnings multiples. Examples include energy infrastructure, oil and gas majors, waste collection, water services, and regulated power networks—essential services that provide reliability over growth excitement.
#halo-trade #ai-disruption #capital-intensive-assets #infrastructure-investment #market-valuation-shift
Read at www.theguardian.com
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