Deep recommendation HALO trading for less than a month, Goldman Sachs suggests shorting some "HALO concept stocks" that have risen too much.

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Goldman Sachs completed a rare strategic U-turn in less than a month—from actively promoting the HALO concept to investors, to proactively shorting its “overheated” constituents—reflecting concerns about crowded trades in heavy assets.

On Tuesday, Faris Mourad, head of Goldman’s thematic trading team, introduced a short basket GSXUHALT in his latest report, specifically targeting U.S. companies with asset intensity but zero or negative profit growth expectations, whose stock prices have surged along with the HALO trend. Goldman believes the market’s pursuit of heavy asset stocks has become indiscriminate, with some stocks’ gains severely disconnected from their fundamentals.

The direct implication for the market: The honeymoon period of HALO trading may be over. Goldman’s data shows the GSXUHALT basket has started to fall after peaking at the end of February, and the bank recommends pairing this short position with its favored thematic long opportunities.

One Month Ago: Goldman Pushes HALO, Heavy Asset Narrative Sweeps Wall Street

Back on February 24th, Goldman’s Global Investment Research Department released a report “HALO Effect: Heavy Assets, Low Obsolescence in the AI Era”, and, together with JPMorgan and other major banks, actively recommended the HALO concept to investors—the combination of Heavy Assets and Low Obsolescence.

The logic was clear and strong at the time: The rapid rise of AI was dealing a double blow to light asset industries. On one hand, AI disrupted the profit margin expectations in industries like software and IT services, causing the market to reassess their terminal value; on the other, tech giants launched an unprecedented cycle of capital spending to maintain their computing power advantage—according to Goldman data, the five biggest U.S. tech companies are expected to spend about $1.5 trillion in capital expenditures from 2023 to 2026, with single-year spending in 2026 likely to exceed $650 billion, surpassing the total historical spending before the AI era.

Goldman’s data at the time was equally impressive: since 2025, its heavy asset portfolio (GSSTCAPI) has outperformed the light asset portfolio (GSSTCAPL) by 35%. On the macro level, higher real interest rates, geopolitical fragmentation, and supply chain restructuring were seen as structurally favorable for heavy asset stocks.

Sudden Shift: Market’s Indiscriminate Pursuit, Some Heavy Asset Stocks’ Gains Detached From Fundamentals

Yet, only a month later, Goldman’s stance changed significantly.

Mourad pointed out in the latest report that the GSXUHALT basket covers companies whose prices rose with the heavy asset trend, but themselves have no profit growth expectations and return rates lag behind high-quality HALO stocks. In other words, the market, in its pursuit of “AI insulation” attributes, has indiscriminately poured capital into all heavy asset stocks, no longer distinguishing their quality.

Data supports this assessment: GSXUHALT basket’s gains have actually surpassed those of the high-quality, asset-intensive basket (GSTHHAIR), meaning heavy asset stocks with low returns and no growth have outperformed peers with true competitive advantages. Meanwhile, the basket’s price performance was aligned with profit expectations before the end of last year, but then diverged noticeably.

For GSXUHALT constituents, Goldman selected companies from the Russell 1000 Index within the most asset-intensive industries, excluding all stocks related to long-term trends like satellites, robotics, quantum computing, AI, and kept only those with significant gains since the start of the year but flat or downgraded profit expectations. The basket’s average asset intensity ratio is about 1.4.

Valuation Signals: Heavy Asset Premium Is at Historical Upper-Mid Levels

Goldman's research last month pointed out that heavy asset stocks are currently trading at a relative valuation premium to light asset stocks. As of last month, the P/E premium of heavy asset stocks was about 3%, at the 62nd percentile over the past decades—while still below historical peaks in 2004, 2012, and 2022, they are no longer cheap.

Since last November, Goldman’s sector-neutral heavy asset basket (GSTHHAIR) has outperformed the light asset basket (GSTHLAIR) by about 20%. Goldman believes this strong heavy asset performance is rooted in investors’ strong demand for “AI insulated” assets—that is, stocks of real assets difficult to disrupt by AI and lagging for years.

Goldman recommends pairing GSXUHALT short positions with its favored thematic long opportunities. The report notes that recent market corrections have created the biggest “buy the dip” opportunities in global equities since the “liberation day”; investors may take short positions in heavy asset stocks lacking fundamental support while building long exposure in directions supported by long-term trends.

Behind this strategic shift lies Goldman’s clear judgment on internal differentiation of HALO trades: Not all heavy asset stocks are worth holding; it’s time to distinguish between those with real competitive advantages and profit momentum, and those hitching a ride merely on the “heavy asset” label.

Risk Warning and DisclaimerMarkets carry risks, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account individual users’ specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their circumstances. Invest accordingly at your own risk. ```