As the global economy braces for the disruptive impact of artificial intelligence, a new investment trend known as the “Halo trade” is emerging, propelling stock markets in the UK and Europe to new heights. This strategy prioritises companies with substantial physical assets that are less susceptible to technological upheaval, particularly in sectors such as energy and transport. Recent reports indicate that this shift has been a key driver in achieving record stock levels by the end of February 2026.
The Emergence of the Halo Trade
The term “Halo” refers to “heavy assets, low obsolescence,” a concept gaining traction among investors who are increasingly wary of the volatility associated with tech-heavy portfolios. As influential firms like Goldman Sachs reveal, there is a growing preference for businesses that possess tangible, productive assets—those that can withstand the inevitable changes brought about by AI.
Goldman Sachs has highlighted a remarkable 35% outperformance of their selected group of capital-intensive companies over their capital-light counterparts since 2025. Analysts note that after years of under-investment, particularly across Europe, there is a decisive movement back towards physical assets. This renewed focus is reshaping valuations and investment returns in significant ways.
What Constitutes a Halo Company?
Goldman’s definition of Halo businesses encompasses those that combine significant physical capital with enduring economic relevance. Examples include energy grids, pipelines, utilities, and transport infrastructure, all of which come with substantial barriers to replication due to high costs, regulatory hurdles, and engineering complexities.
Ruben Dalfovo, an investment strategist at Saxo, points to energy infrastructure and oil and gas majors as prime examples of Halo companies. He also emphasises the importance of industries that provide essential services—what he refers to as “you still need this on Monday morning” businesses, such as waste management and regulated water services.
Dalfovo articulates a broader sentiment: “These sectors may not make for exciting dinner conversation, but when the market shifts towards reliability over novelty, they come to the forefront.”
Record Highs in the FTSE 100 and Beyond
The FTSE 100, which is heavily populated with companies from traditional sectors, has experienced a remarkable surge, achieving a series of record highs throughout 2026. February marked its strongest month since November 2022, contributing to an impressive streak of gains over eight consecutive months.
Ipek Ozkardeskaya, a senior analyst at Swissquote, explains that investors are pivoting away from the expensive AI and growth stocks and instead gravitating towards businesses with solid infrastructure and long-lasting assets. This trend is particularly advantageous for the FTSE 100, which is benefitting from inflows into energy and mining sectors, consequently driving the index to unprecedented levels.
The pan-European Stoxx 600 index has also reached new peaks, buoyed by a substantial shift from US tech stocks towards more stable sectors. Notably, the oil tanker shipping firm Frontline has emerged as the top performer within the Stoxx 600, boasting a striking 57% increase in value since the beginning of the year. Similarly, Norway’s Kongsberg Gruppen, known for its high-tech systems catering to marine, aerospace, defence, and energy industries, has seen a robust gain of 46%.
The Impact on Technology Firms
In stark contrast, companies focused on software and data have faced mounting pressure in recent weeks. The rise of AI has presented significant challenges, as many technology firms find their revenue models threatened by the rapid introduction of autonomous systems. A speculative report from Citrini Research recently unnerved investors by suggesting a potential future where AI disrupts job markets, leading to increased unemployment and a downturn in stock performance.
These developments signal a notable shift in market sentiment, indicating a move away from the high-risk, high-reward atmosphere that has characterised tech investments in recent years.
Why it Matters
The burgeoning interest in Halo companies reflects a critical turning point for investors who are now prioritising stability and tangible assets over the allure of disruptive technology. As the threat of AI looms larger, the investment landscape is evolving, and this shift may well reshape market dynamics for years to come. Understanding these trends not only highlights the immediate implications for stock performance but also underscores the broader economic shifts that could redefine industries and investment strategies in a post-AI world.
