Hot Recommendation: Goldman Sachs Advises “Shorting HALO” Within a Month
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Hot Recommendation: Goldman Sachs Advises “Shorting HALO” Within a Month
Goldman Sachs Research points out that capital-intensive stocks are currently trading at a valuation premium relative to asset-light stocks—though still below historical peaks, they are no longer cheap, and in some cases, share price gains have significantly decoupled from fundamentals.
Navigating Web3 tides with focused insightsGoldman Sachs executed a rare strategic U-turn in less than a month—from aggressively pitching the HALO concept to investors to actively shorting its “overheated” component stocks—reflecting growing concerns about overcrowding in capital-intensive trades.
On Tuesday, Faris Mourad, head of Goldman Sachs’ thematic trading team, unveiled a new short basket, GSXUHALT, in his latest report. This basket specifically targets U.S. companies with high asset intensity but zero—or even negative—earnings growth expectations, whose share prices have nonetheless surged sharply amid the broader HALO rally. Goldman Sachs contends that market enthusiasm for capital-intensive stocks has become indiscriminate, with some stocks’ price gains now severely decoupled from fundamentals.
The direct implication of this shift is that the HALO trade’s honeymoon phase may already be over. According to Goldman Sachs data, the GSXUHALT basket peaked at the end of February and has since begun to decline. The firm recommends pairing this short position with its preferred thematic long opportunities.
One Month Ago: Goldman Sachs Championed HALO; Capital-Intensive Narrative Swept Wall Street
Rewind to February 24, when Goldman Sachs Global Investment Research published its report “The HALO Effect: Capital-Intensive, Low Obsolescence in the AI Era”, joining major banks like JPMorgan in actively promoting the HALO concept—i.e., the combination of Heavy Assets and Low Obsolescence.
The logic then was clear and compelling: AI’s rapid rise is delivering a double blow to asset-light industries. First, AI is disrupting margin expectations in software and IT services, prompting markets to reassess terminal value in these sectors. Second, tech giants—seeking to maintain compute-advantage competitiveness—are embarking on an unprecedented capital-expenditure cycle. Per Goldman Sachs data, the top five U.S. tech firms are expected to spend approximately $1.5 trillion on capex between 2023 and 2026—with 2026 alone projected to exceed $650 billion, surpassing their pre-AI-era cumulative total.
Goldman Sachs’ own data was equally striking: Since 2025, its capital-intensive portfolio (GSSTCAPI) has outperformed its asset-light portfolio (GSSTCAPL) by 35%. At the macro level, higher real interest rates, geopolitical fragmentation, and supply-chain reconfiguration are viewed as structural tailwinds for capital-intensive equities.
The Pivot: Indiscriminate Market Enthusiasm—Some Capital-Intensive Stocks Have Outrun Fundamentals
Yet just one month later, Goldman Sachs’ stance shifted markedly.
In his latest report, Mourad notes that companies in the GSXUHALT basket are those riding the broad capital-intensive rally despite lacking earnings growth prospects and delivering returns demonstrably inferior to high-quality HALO names. In other words, in chasing the “AI-immune” attribute, investors have flooded all capital-intensive stocks indiscriminately—no longer distinguishing between quality tiers.
Data corroborates this view: The GSXUHALT basket’s gains have actually outpaced those of the high-quality, highly asset-intensive basket (GSTHHAIR), meaning low-return, no-growth capital-intensive stocks have outperformed peers with genuine competitive moats. Meanwhile, the basket’s share-price trajectory remained broadly aligned with earnings expectations until late last year—after which it diverged sharply.
In constructing the GSXUHALT basket, Goldman Sachs selected firms from the Russell 1000 operating in the most asset-intensive industries, excluding any linked to long-term trends such as satellites, robotics, quantum computing, or AI—retaining only those with significant year-to-date price appreciation but flat or downwardly revised earnings expectations. The basket’s average asset-intensity ratio stands at ~1.4.
Valuation Signal: The Capital-Intensive Premium Is Now at Historically Modest-Plus Levels
Goldman Sachs’ research last month already noted that capital-intensive stocks currently trade at a valuation premium relative to asset-light peers. As of last month, the P/E premium stood at ~3%, placing it at the 62nd percentile over several decades—still below historical peaks seen in 2004, 2012, and 2022, but no longer cheap.
Since November last year, Goldman Sachs’ industry-neutral capital-intensive basket (GSTHHAIR) has outperformed its asset-light counterpart (GSTHLAIR) by ~20%. In Goldman Sachs’ view, this recent strength stems from intense investor demand for “AI-immune” assets—i.e., tangible, physical-asset stocks historically underperforming and perceived as resistant to AI-driven disruption.
Goldman Sachs recommends pairing the GSXUHALT short position with its favored thematic long opportunities. The report notes that the recent market correction has created the largest “buy-the-dip” opportunity across global equities since “Liberation Day,” allowing investors to short capital-intensive stocks lacking fundamental support while establishing long exposure in areas backed by durable secular trends.
Underpinning this strategic pivot is Goldman Sachs’ explicit assessment of intra-HALO divergence: Not all capital-intensive stocks merit holding. The time has come to differentiate rigorously between those with genuine competitive moats and upward earnings momentum—and those merely hitching a ride on the “capital-intensive” label.
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