The rise of 'Halo' companies, which focus on heavy assets and low obsolescence, is driving UK and EU stock markets to record highs as investors seek protection from potential AI disruptions.
Investors in the UK and EU are increasingly focusing on 'Halo' companies, which are defined by their substantial physical assets that are less likely to become obsolete due to advancements in artificial intelligence (AI). This trend, termed the Halo trade, stems from a growing belief among investors that tangible assets such as energy and transport infrastructure will offer more stability and resilience in an increasingly uncertain economic landscape dominated by AI innovations.
Despite some challenges faced by mega-cap tech companies in the US, the Halo trade has significantly impacted market performance in Europe, pushing stock indices to record highs by the end of February 2026. Goldman Sachs highlighted that their analysis of over 100 'big-spending' companies revealed that those labeled as Halo companies outperformed their capital-light counterparts by a remarkable 35% since the beginning of 2025. This performance underscores the market's shifting preferences toward fiscal prudence and tangible asset allocation as a strategic response to potential economic turbulence caused by AI advancements.
Analysts from Goldman Sachs observed a notable shift in corporate investment strategies, particularly in Europe where there has been a history of under-investment. They noted that businesses are decidedly moving back toward investing in physical assets, suggesting that the economic momentum may continue to favor companies characterized by their asset intensity. This shift not only reflects investor sentiment but may also indicate a broader transformation in corporate strategies as industries prepare for the disruptive potential of AI in the coming years.
