Goldman Sachs said Tuesday that it’s advising investors to focus on so-called HALO stocks — an acronym coined to refer to shares of companies with “heavy assets, low obsolescence.” “Higher real yields, geopolitical fragmentation and supply chain rewiring have shifted equity leadership back towards tangible productive assets,” analysts at the investment bank wrote in a note to clients. They added that markets have increasingly rewarded “Capital Intensive” companies for their capacity, networks, infrastructure and engineering complexity, which are seen as having low exposure to becoming outmoded amid technological advancements. At the same time, they said, many big-name “Capital Light” firms – those that have traditionally operated with relatively few assets – have been transformed into the biggest capital spenders in history thanks to the race to develop cutting-edge AI. The ongoing capex boom, they noted, was expected to drive growth in a handful of key areas: data centers, semiconductors, utilities and defense, which are expected to account for more than 40% of global capital expenditure this year. “We reiterate our preference to invest in companies benefiting from an acceleration in capex,” Goldman’s team said. “Positioning looks challenging in the short term but supportive in the long term.” “Longer-term allocations remain heavily skewed away from Value, suggesting investors remain under-positioned for a world in which physical assets, infrastructure and industrial capacity regain strategic importance,” they added. Goldman said its Equity Research team’s recommendations in the HALO space tend to focus on five themes. These sectors were infrastructure, basic materials, aerospace and defense, manufacturing and consumer platforms, and the “physical layer of technology.” Infrastructure In infrastructure, the analysts said investors should look at companies that own critical networks such as grids, pipelines, fiber networks and transport assets that are difficult to replicate. “Buy-rated names are: Enel , E.ON , ENGIE , RWE , SNAM , Naturgy Energy Group , EDP Renewables , Orsted , Veolia Environnement , Prysmian , Nexans , VINCI , Getlink and Flughafen Zürich ,” Goldman’s note said. Basic materials Companies in the materials sector that are worth focusing on, according to Goldman Sachs, are those that “control essential resources, industrial facilities and processing assets that underpin construction, manufacturing and electrification.” The bank’s buy-rated stocks in the basic materials space include Shell , BP , Eni , Repsol , Antofagasta , Holcim , Air Liquide and BASF . Aerospace and defense Defense stocks boomed last year as NATO and European countries pledged to drastically increase their security budgets. This year, the sector has seen more volatile trade, as investors have questioned whether companies can meet the growing demand and whether some pockets of the industry are overvalued. According to Goldman Sachs’s team, the defense companies to invest in are those that “benefit from highly specialised manufacturing capabilities, long product cycles and rising geopolitical demand.” Buy-rated stocks are French defense primes Airbus and Safran , Britain’s BAE Systems , Melrose Industries and Rolls-Royce , and German arms manufacturer Rheinmetall . Rolls-Royce stock has risen in value by 56% over the past year, while Airbus and BAE Systems have gained around 19% and 7%, respectively. Rheinmetall shares, which more than doubled in value in 2025, have fallen by 35% over the past 12 months. Manufacturing and consumer platforms Stocks in manufacturing and consumer platforms that Goldman recommends to investors are those that combine large-scale production assets, distribution networks and durable customer demand. Companies with a buy-rating include automakers Volvo, BMW and Porsche, as well as food and drink manufacturers Nestlé , Heineken and Lotus Bakeries . British retailer Marks & Spencer and International Consolidated Airlines Group – the parent company of British Airways – have also been given a “Buy” rating by the bank’s research team. Technology Investors looking to include HALO stocks in their portfolio can also look at the “physical layer of technology,” according to Goldman Sachs, which means seeking out companies that provide the hardware and infrastructure that enable the digital economy. The bank’s research team pointed to semiconductor equipment and telecom networks as examples of subdivision within the space. Buy-rated stocks include Dutch semiconductor equipment makers ASML and ASMI , as well as German chipmaker Infineon . Deutsche Telekom , Orange and Telefónica also fall under Goldman’s Buy-rated companies that operate in the physical side of tech. “Taken together, these themes reinforce the central idea behind HALO: in the Post Modern Cycle, attractive opportunities increasingly sit in businesses that own hard-to-replace physical assets and provide the infrastructure required for both the digital and physical economy to function,” Goldman’s analysts said. While the stocks outlined in Tuesday’s note were broadly European firms, the authors stressed that the HALO trade was an international trend. “This is a global shift, not a regional story,” they said. ” The HALO framework is now being replicated by our Equity Strategy colleagues across regions, with similar baskets in the US, Asia-Pacific, Japan and [emerging markets], and we observe consistent dynamics everywhere.”
