Investment in AI-Resilient ‘Halo’ Companies Propels UK and EU Markets to New Record Levels

As the global economy stands on the brink of transformation driven by artificial intelligence, investors have adopted a fresh perspective known as the Halo trade. This new paradigm is reshaping investment strategies, as participants seek to navigate a landscape increasingly influenced by AI.

The term “Halo” is an abbreviation for “heavy assets, low obsolescence.” This approach has garnered significant attention from investors keen on identifying companies that possess substantial, tangible assets. Such firms are seen as more resilient to the disruptive effects of AI, particularly in sectors like energy and transportation infrastructure.

Despite facing challenges at the start of 2026, the sizable tech companies in the US have not deterred momentum from the Halo trade. UK and EU stock markets have surged to unprecedented heights, reaching record levels by the close of February, largely buoyed by investments in asset-heavy industries.

Goldman Sachs recently reported that their collection of over 100 capital-intensive companies has outperformed a comparable group of businesses that rely on lighter capital investments by a remarkable 35% since 2025. This trend underscores how asset intensity is becoming a crucial component in driving valuations and financial returns.

Goldman Sachs analysts pointed out a notable shift in corporate focus after a prolonged period of under-investment, especially in Europe. Businesses are increasingly leaning back towards physical, tangible assets. The firm defines Halo businesses as those characterized by significant physical capital investments, where barriers to replication can include costs, regulatory measures, time constraints, and engineering complexities. These businesses have long-term economic viability, and examples are manifold—utilities, pipelines, transport infrastructure, and industrial machinery, to name a few.

Research indicates that the valuation gap between capital-heavy and capital-light firms in Europe has significantly narrowed. Capital-intensive companies are now achieving higher ratings based on price-to-earnings ratios, a vital metric for assessing stock performance.

Ruben Dalfovo, an investment strategist at Saxo Bank, cited energy infrastructure firms and integrated oil and gas companies as prime examples of Halo businesses. These companies maintain control over their entire supply chains and represent what he refers to as “you still need this on Monday morning” sectors, including utilities.

“Services like waste collection, water management, and regulated power networks might not spark much conversation over dinner. Still, they gain attention when investors turn away from the thrill of emerging tech and start prioritizing reliability and stability,” Dalfovo remarked.

The FTSE 100 index, heavily populated with legacy companies from traditional sectors, has been on an upward trajectory, breaking record after record throughout 2026. Notably, February turned out to be the strongest month for the blue-chip index since November 2022, marking its eighth consecutive monthly increase.

“Investors are transitioning their capital from high-priced AI stocks and growth companies into businesses with tangible infrastructures and long-lasting assets—sectors like energy, materials, and transportation,” stated Ipek Ozkardeskaya, a senior analyst at Swissquote.

Ozkardeskaya noted that the FTSE 100 is positioned favorably to attract investments related to the Halo trade. The index has been climbing steadily, propelled by stocks in the energy and mining sectors.

The pan-European Stoxx 600 index also surged to all-time highs recently, benefiting from a rotation of capital away from US tech stocks and into various other sectors. Companies like Frontline, a Cyprus-based oil tanker shipping firm, have emerged as standout performers, gaining 57% year-to-date. Similarly, Kongsberg Gruppen, a Norwegian corporation specializing in high-tech systems for marine, aerospace, defense, and energy sectors, has risen 46% since January.

Conversely, software and data companies are facing increased scrutiny, with many now embroiled in challenges as AI innovations threaten existing revenue models. Just last week, a speculative report by analysts at Citrini Research sent tremors through the market, outlining a dystopian future where autonomous AI systems disrupt the US economy, leading to job losses and strained markets and mortgages.