Depending on where your popular culture interests lie, the word HALO could refer to a popular video game, a Beyoncé song, or a symbolic ring of light. However, within an investment context, HALO currently refers to Hard/Heavy Assets, Low Obsolescence, an acronym meant to convey aspects of the economy that would least likely face disruption from artificial intelligence. Year to date (as of February 22nd, 2026), the performance of Energy, Materials, Industrials, and Consumer Staples has led the S&P 500 Index, while that of Information Technology and Financials has underperformed.
Disruption is expensive and far-reaching
The race for advancement is an expensive endeavour, as the four major hyperscalers (i.e., Alphabet, Microsoft, Meta, and Amazon) have once again raised their capital expenditure for the year, expecting to spend almost $700 billion combined to fuel their AI build-outs. As these firms continue to develop their AI capabilities and future ecosystem, they come with lower margins and less cash generation in the present – a scenario that some investors are increasingly wary of. Furthermore, a few of these firms have begun issuing bonds to finance their AI projects.
While the cost of AI is a top-of-mind concern, its far-reaching disruption is another rising consideration, as the recent downturn in Software as a Service (SaaS) stocks and financial data equities has stoked the idea that these sectors are prime for AI disruption. In turn, giving further credence to the HALO trade.
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