Goldman Sachs has executed a rare strategic reversal in under one month—transitioning from actively promoting the HALO concept to investors to recommending short positions in certain components that have seen excessive gains. This shift reflects growing concerns over crowding in heavy-asset trades.
On Tuesday, Faris Mourad, head of Goldman Sachs' thematic trading team, introduced a dedicated short basket named GSXUHALT in a recent report. The basket targets U.S. companies that are asset-intensive but have zero or negative earnings growth expectations, yet have experienced substantial stock price increases amid the HALO trend. Goldman argues that market enthusiasm for heavy-asset stocks has become indiscriminate, with some individual stocks rising significantly out of line with their fundamentals.
This change implies that the honeymoon phase for HALO-themed trades may be over. Data from Goldman indicates that the GSXUHALT basket peaked in late February and has since begun to decline. The firm advises investors to pair this short position with thematic long opportunities it favors.
**One Month Ago: Goldman Championed HALO, Heavy-Asset Narrative Swept Wall Street**
On February 24, Goldman Sachs Global Investment Research released a report titled "The HALO Effect: Heavy Assets, Low Obsolescence in the AI Era," joining other major banks like JPMorgan in actively promoting the HALO concept—a combination of Heavy Assets and Low Obsolescence.
The logic at the time was clear and compelling: the rapid rise of AI is creating a dual challenge for light-asset industries. On one hand, AI is disrupting profitability expectations in sectors like software and IT services, leading markets to reassess their terminal value. On the other hand, tech giants are embarking on an unprecedented capital expenditure cycle to maintain competitive advantages in computing power. According to Goldman Sachs data, the top five U.S. tech giants are projected to spend approximately $1.5 trillion on capital expenditures between 2023 and 2026, with spending in 2026 alone expected to exceed $650 billion—more than their total pre-AI era expenditures.
Goldman's data from that period was equally striking: since 2025, its heavy-asset portfolio (GSSTCAPI) had outperformed its light-asset portfolio (GSSTCAPL) by a cumulative 35%. Macro factors such as higher real interest rates, geopolitical fragmentation, and supply chain restructuring were seen as creating structural tailwinds for heavy-asset stocks.
**Sharp Turn: Indiscriminate Market Enthusiasm Leaves Some Gains Unsupported**
However, just one month later, Goldman's stance has changed significantly.
Mourad noted in the latest report that the companies included in the GSXUHALT basket are those that have risen with the broader heavy-asset trend but lack earnings growth expectations and show returns significantly trailing high-quality HALO candidates. In other words, as markets chase "AI-resistant" attributes, capital has flowed indiscriminately into all heavy-asset stocks, regardless of quality.
Data supports this view: the GSXUHALT basket has actually outperformed the high-quality, high asset-intensity basket (GSTHHAIR), indicating that low-return, no-growth heavy-asset stocks are beating their truly competitive peers. Furthermore, while the basket's stock price movement was aligned with earnings expectations until late last year, a clear divergence has since emerged.
In selecting components for GSXUHALT, Goldman screened Russell 1000 Index companies from the most asset-intensive sectors, excluding all stocks related to long-term trends such as satellites, robotics, quantum computing, and AI. Only stocks with significant year-to-date gains but flat or downward revised earnings expectations were retained. The basket's average asset-intensity ratio is approximately 1.4.
**Valuation Signal: Heavy-Asset Premiums Are Above Historical Average**
Goldman's research last month already indicated that heavy-asset stocks are trading at a valuation premium compared to light-asset stocks. As of last month, the price-to-earnings premium for heavy-asset stocks was about 3%, placing it in the 62nd percentile over recent decades. While still below historical peaks seen in 2004, 2012, and 2022, this level is no longer considered cheap.
Since November of last year, Goldman's sector-neutral heavy-asset basket (GSTHHAIR) has outperformed its light-asset basket (GSTHLAIR) by approximately 20%. According to Goldman, this strong performance stems from intense investor demand for "AI-resistant" assets—specifically, stocks of companies with physical assets that are less susceptible to AI disruption and have underperformed for years.
Goldman recommends pairing the GSXUHALT short position with thematic long opportunities. The report notes that recent market adjustments have created the largest "buy-the-dip" opportunity in global equities since a period referred to as "Liberation Day." Investors can establish long exposure in sectors supported by long-term trends while shorting heavy-asset stocks lacking fundamental support.
Behind this strategic pivot is Goldman's clear assessment of differentiation within the HALO trade: not all heavy-asset stocks are worth holding. A distinction must now be made between companies with true competitive moats and upward earnings momentum and those merely riding the coattails of the "heavy-asset" label.
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