Highly recommended: Less than a month after, Goldman Sachs advises "shorting" HALO.

Goldman Sachs completed a rare strategic turnaround in less than a month—from actively promoting the HALO concept to investors to actively shorting the “overhyped” component stocks, reflecting concerns about crowdedness in heavy asset trades.

On Tuesday, Faris Mourad, head of Goldman Sachs’ thematic trading team, introduced a short basket, GSXUHALT, targeting U.S. companies that are asset-intensive but have zero or negative earnings growth expectations, yet whose stock prices have surged significantly along with the HALO trend. Goldman Sachs believes that market enthusiasm for heavy asset stocks has become undifferentiated, with some stocks’ gains seriously disconnected from fundamentals.

This shift implies that the honeymoon period for HALO trading may be over. Goldman Sachs data shows that the GSXUHALT basket peaked at the end of February and has since begun to decline, and the firm recommends pairing this short position with its favored thematic long opportunities.

A month ago: Goldman Sachs heavily promoted HALO, and the heavy asset narrative swept Wall Street

Back on February 24, Goldman Sachs’ Global Investment Research published a report titled “HALO Effect: Heavy Assets and Low Obsolescence in the AI Era,” joining major banks like JPMorgan Chase in actively promoting the HALO concept—combining Heavy Assets with Low Obsolescence.

The logic at the time was clear and compelling: the rapid rise of AI was exerting a dual impact on light-asset industries. On one hand, AI disrupted profit margin expectations in software, IT services, and other sectors, prompting the market to reassess their terminal value; on the other hand, tech giants launched an unprecedented capital expenditure cycle to maintain their computing power advantage—according to Goldman Sachs data, the five largest U.S. tech giants are expected to spend about $1.5 trillion from 2023 to 2026, with over $650 billion in 2026 alone, surpassing their total AI-era capital spending to date.

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

Strategic reversal: Market indiscriminate enthusiasm has caused some heavy asset stocks to lose fundamental support

However, just a month later, Goldman Sachs’ stance shifted significantly.

Mourad’s latest report states that the companies in the GSXUHALT basket are those that have risen along with the overall heavy asset trend but lack earnings growth expectations and have returns that are significantly lagging behind high-quality HALO stocks. In other words, as the market chases “AI-insulated” assets, capital has flowed indiscriminately into all heavy asset stocks, regardless of quality.

Data confirms this: the gains of the GSXUHALT basket have actually surpassed those of the high-quality, high-asset-density basket (GSTHHAIR), meaning that low-return, no-growth heavy asset stocks have outperformed truly competitive counterparts. Meanwhile, the price trend of this basket was aligned with earnings expectations until late last year but has since diverged sharply.

In selecting components for GSXUHALT, Goldman Sachs chose companies from the most asset-intensive industries within the Russell 1000 index, excluding all long-term trend-related stocks such as satellites, robotics, quantum computing, and AI, and only retained stocks that have shown significant gains since the start of the year with flat or downward earnings revisions. The basket’s average asset density ratio is approximately 1.4.

Valuation signals: Heavy asset premiums are now at the upper-middle level historically

Goldman Sachs’ research last month indicated that heavy asset stocks are currently trading at a valuation premium relative to light asset stocks. As of last month, the valuation premium was about 3%, placing it in the 62nd percentile over the past few decades. While still below the peaks seen in 2004, 2012, and 2022, they are no longer cheap.

Since November last year, Goldman Sachs’ industry-neutral heavy asset basket (GSTHHAIR) has outperformed the light asset basket (GSTHLAIR) by about 20%. Goldman Sachs attributes this strength to investors’ strong demand for “AI-insulated” assets—those that are less likely to be disrupted by AI and have underperformed for years.

Goldman Sachs recommends pairing the GSXUHALT short with its favored thematic long opportunities. The report notes that recent market adjustments have created the largest “buy-the-dip” opportunity since “D-Day,” allowing investors to short unfundamental heavy asset stocks while establishing long positions in sectors with long-term trend support.

This strategic shift reflects Goldman Sachs’ clear judgment of the internal differentiation within HALO trading: not all heavy asset stocks are worth holding. Truly competitive stocks with upward earnings momentum and barriers to entry are now distinguishable from those merely riding the “heavy asset” label.