To The Moon

Hi Tigers 👋

Recently, an interesting debate has been circulating in the market: Is the current rally trading TACO, or HALO?

On one side, we have oil price volatility driven by geopolitics. On the other, the long-term boom in AI infrastructure investment.

Put simply: TACO is the short-term story, HALO is the long-term one.

But the real question is: Which narrative will the market believe more?

1. What Is the TACO Trade? The Logic Behind Oil’s Spike and Pullback

Let’s start with the hottest buzzword recently: TACO.

TACO stands for “Trump Always Chickens Out.” In simple terms, it suggests that Trump ultimately avoids pushing conflicts to the extreme.

The phrase carries a bit of humor, but the market has genuinely been trading geopolitical risks using this logic. And the recent oil price movement is a classic example.

As tensions between the U.S. and Iran escalated, the market became worried that shipping through the Strait of Hormuz could be disrupted. As a result, Brent crude briefly surged to around $120 per barrel.

If the strait were to be blocked for an extended period, nearly 20% of global oil transportation could be affected. Naturally, markets quickly priced in a significant risk premium for oil.

But the situation soon shifted. Trump publicly stated that the war with Iran was “basically over” or “would end soon.”

Markets quickly started trading a new expectation: the conflict might not escalate further.

As a result, oil prices fell rapidly and are now back to around $90 per barrel.

This is the classic TACO trading pattern:

Conflict escalation → Market panic → Oil prices surge

Political easing → Risk appetite improves → Oil prices fall

Under this trading logic, many assets can reverse sharply.

Take the energy sector as an example. Oil giants like $Exxon Mobil(XOM)$ , $Chevron(CVX)$ , and $Occidental Petroleum Corp. Warrants 2027/08/03 22C(OXY.WS)$ often lead the market during rapid oil price rallies. But once investors begin to believe that tensions will not escalate further, the risk premium embedded in these stocks can quickly fade.

A similar dynamic applies to the oil tanker and shipping sector. Companies like $FRONTLINE PLC(FRO)$ and Euronav could see tanker rates spike if the Strait of Hormuz faces shipping disruptions. But if tensions ease, those rate expectations can cool off just as quickly.

From a trading perspective, TACO is essentially a macro sentiment trade.

It mainly influences:

• The short-term ceiling for oil prices

• Changes in inflation expectations

• Fluctuations in market risk appetite

However, these effects typically do not last very long.

2. The Longer-Term Narrative: The HALO Trade

Compared with short-term macro sentiment, many institutions are focusing more on another theme: HALO.

HALO stands for Heavy Asset + Low Obsolescence. In other words: capital-intensive assets with low technological obsolescence.

Simply put:

In the AI era, the most certain investment opportunities may not lie in software, but in infrastructure.

The reason is straightforward. AI models may evolve rapidly, and software could be disrupted by new technologies. But certain assets are far less likely to become obsolete quickly, such as:

• Data centers

• Power infrastructure

• Semiconductor equipment

• Chip manufacturing facilities

These form the true foundational infrastructure of the AI industry. Right now, global tech giants are investing massive amounts of capital into building exactly these kinds of facilities.

For example:

• $Microsoft(MSFT)$ is continuously expanding its AI data center investments

• $Amazon.com(AMZN)$ AWS is rapidly increasing AI computing capacity

• $Alphabet(GOOG)$ and $Meta Platforms, Inc.(META)$ are also raising their capital expenditures

Many analysts estimate that AI-related CapEx could reach hundreds of billions of dollars in the coming years. And a large portion of that spending will flow into HALO assets

3. Which Companies Benefit From the HALO Trade?

If we follow the HALO logic through the supply chain, a very clear structure emerges.

1.AI Chips

First comes AI chips. The explosion in AI computing demand directly benefits GPU and AI accelerator manufacturers, such as:

• $NVIDIA(NVDA)$

• $Advanced Micro Devices(AMD)$

The rapid growth in AI training and inference demand has kept GPUs in persistent supply shortages.

2.Semiconductor Equipment

Further upstream, the real HALO assets may actually be semiconductor equipment companies, such as:

• $ASML Holding NV(ASML)$

• $Applied Materials(AMAT)$

• $Lam Research(LRCX)$

These companies share several defining characteristics:

• Extremely expensive equipment

• Very high technological barriers

• Long replacement cycles

For example, a single lithography machine can remain in operation for more than a decade. That’s a perfect example of Low Obsolescence.

3.Data Center Infrastructure

Another often overlooked sector is data center infrastructure. One of the biggest costs of training AI models isn’t just chips—it’s power and cooling systems.

Companies such as:

• $Equinix(EQIX)$ (data centers)

• $Vertiv Holdings LLC(VRT)$ (power and cooling systems)

• $SUPER MICRO COMPUTER INC(SMCI)$ (AI servers)

are essentially doing the same thing: Providing the infrastructure that powers AI.

During a long AI capital expenditure cycle, these companies can continue to benefit for years.

4. TACO vs HALO: What Is the Market Really Betting On?

In reality, the market may currently be trading both narratives at the same time.

In the short term:

If geopolitical tensions ease, Oil prices fall → Inflation pressure declines → Market risk appetite improves.

That’s the TACO trade.

But from a longer-term perspective: Global tech giants are still increasing AI capital expenditures, and the AI infrastructure investment cycle could last 5–10 years.

That’s the HALO trade.

This is why we are seeing a fascinating phenomenon:Energy stocks remain highly volatile as oil prices fluctuate, while some companies in the AI supply chain continue hitting new highs.

In other words:

TACO drives short-term sentiment.HALO drives long-term trends.

Questions for Discussion 👇

• If oil prices continue to fall, do you think energy stocks (such as Exxon or Chevron) could see a short-term pullback?

• Within the AI supply chain, which segment do you prefer: chips (NVIDIA), equipment (ASML), or data center infrastructure?

• Looking ahead 3–5 years, do you think the market’s main narrative will be TACO (macro trading) or HALO (AI infrastructure)?

Feel free to share your thoughts in the comments 👇

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