Just a couple of years ago, companies that scaled without heavy capital expenditures dominated global equity markets. Growth stocks - particularly in technology - commanded persistent valuation premiums.
But according to a new Goldman Sachs note from strategists Guillaume Jaisson and Peter Oppenheimer, that era is giving way to something structurally different.
What's emerging instead as the new market paradigm is what they call HALO - Heavy Assets, Low Obsolescence.
AI's Dual Shock To Markets
Goldman Sachs sees a dual shock from AI. The first is a direct disruption to the Software-as-a-Service, or SaaS, business model.
"AI is disrupting many of the traditional new‑economy business models that dominated the past decade," Jaisson said.
According to the firm, the recent selloff in Software and IT Services does not reflect an earnings collapse. It reflects a repricing of terminal value and long-term margin durability.
The second effect of AI is transforming former capital-light champions into capital intensive giants almost overnight.
"The five US hyperscalers have embarked on an unprecedented spending cycle," Goldman Sachs analyst said.
Since ChatGPT launched in 2022, U.S. hyperscalers are set to deploy around $1.5 trillion in capital expenditures between 2023 and 2026.
Before 2022, they invested roughly $600 billion across their entire history. In 2026 alone, their capex is on track to exceed $650 billion.
What Are HALO Stocks?
Goldman introduces a framework called HALO: Heavy Assets, Low Obsolescence.
HALO companies share two traits.
They rely on substantial physical capital with high barriers to replication. They own assets whose economic relevance persists across technological cycles.
Examples include transmission grids, pipelines, utilities, transport infrastructure, critical machinery and long-cycle industrial capacity.
These businesses are difficult to replicate due to cost, regulation, engineering complexity or time to build.
According to Goldman Sachs, utilities, basic resources, energy and telecom stand out as unmistakably capital intensive, built on regulated infrastructure, high fixed investment and long-lived assets with limited obsolescence.
At the other extreme, software and IT services, internet, media and digital platform businesses fall squarely into the capital light category, driven more by human capital than physical assets.
Industry performance now clearly reflects that rotation:
Over the past year, the VanEck Gold Miners ETF
The Data Is Following The Narrative
Several forces are reinforcing this rotation:
- Valuation convergence: Capital Intensive and Capital Light sectors now trade nearly in line - a dramatic shift from the wide premium Growth commanded for years.
- Macro tailwinds: Fiscal expansion, re-regionalization, manufacturing revival and higher replacement costs all favor tangible assets.
- Flows: Investors are allocating more toward Value and diversifying away from crowded U.S. Tech exposure.
- Earnings momentum: Consensus forecasts now show faster EPS growth and improving ROE for Capital Intensive sectors, while Capital Light ROE is expected to flatten.
If AI compresses margins in software while driving massive physical investment elsewhere, the market's old leadership playbook may not work the same way.
Goldman's call suggests the next winners may not be the most scalable. They may be the hardest to replace.
