By Barbara Kollmeyer

Goldman Sachs lays out stock picks in the HALO trade it sees entering a tougher, second phase

Shell is one company Goldman Sachs favors in a more challenging phase of the HALO trade to come.

Earlier this year, when artificial intelligence disruption worries started to run high, Josh Brown CEO of Ritholtz Wealth Management, declared the HALO trade - heavy assets, low obsolescence- would be the most important one of the year.

The trade that focused on companies immune to artificial intelligence's disruptive force has done well, a team of Goldman Sachs strategists told clients on Tuesday. But in our call of the day, they see a second phase to come, in which those companies have to deliver on earnings and winners and losers start to look more apparent.

Guillaume Jaisson and his team focus their buy-rated HALO recommendations on five themes: infrastructure, basic materials, aerospace and defense, complex manufacturing and consumer platforms and the physical layer of tech. What their recommendations have in common: scarce physical assets, high barriers to entry, rising replacement costs and limited risk of technical obsolescence.

Pairing capital-intensive stocks with a short position on capital-light companies such as software services has delivered a 20% year-to-date gain, even after a small initial selloff for stocks exposed to manufacturing and global trade due to the Iran war. The shock of war has also strengthened energy security and industrial sovereignty, benefiting oil and gas and utility companies.

The HALO trade is not out of fuel, they say. Investors are still skewed away from value stocks, "suggesting investors remain under-positioned for a world in which physical assets, infrastructure and industrial capacity regain strategic importance," they said.

All these companies now have to do is deliver on higher earnings, rather than rely on the market to value them at higher multiples.

Sifting through the HALO companies that are more likely to perform, Jaisson and his team say data centers, semiconductors, utilities and defense are expected to represent more than 40% of total capex in 2026 from 25% in 2022.

"This concentration reflects the underlying drivers of the cycle, including AI investment, the energy transition and re-industrialisation, and supports the view that we are in a sustained capex upcycle rather than a short-lived rebound," said Goldman.

The HALO theme, importantly, is global, and they said investors should watch out for regions where the potential hasn't fully been priced in for companies. "The global market structure suggests that this new phase of 'physical economy' growth may favor Europe, Japan and parts of [emerging markets] more than the U.S., where equity markets remain more concentrated in capital light sectors," they said.

And that may explain some of the relative outperformance by non-U.S. markets this year.

Here are some of Goldman's buy-rated picks:

  • Infrastructure companies: Enel IT:ENEL, E.ON XE:EOAN, RWE XE:RWE, Veolia Environnement FR:VIE, Naturgy Energy Group ES:NTGY
  • Basic materials: Shell SHEL, BP BP, Eni IT:ENI, Repsol ES:REP, Antofagasta UK:ANTO, Air Liquide FR:AI
  • Aerospace and defense: Airbus FR:AIR, BAE Systems UK:BA, Rheinmetall XE:RHM, Rolls-Royce UK:RR, Melrose Industries UK:MRO, Safran FR:SAF
  • Manufacturing and consumer platforms: Volvo SE:VOLV.B, BMW XE:BMW, Porsche XE:P911, Nestlé CH:NESN, Heineken NL:HEIA, Marks & Spencer UK:MKS, International Consolidated Airlines UK:IAG
  • Physical layer of technology: ASML Holding ASML, ASM International NL:ASM, Infineon XE:IFX, Deutsche Telekom XE:DTE , Orange FR:ORA, BT Group UK:BT.A, Telefónica ES:TEF, Telenor NO:TEL, Telia SE:TELIA

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are mixed with tech sliding after a Samsung rout. Crude (CL.1) (BRN00) is up about 1% amid fresh tensions in the Strait of Hormuz.

Key asset performance Last 5d 1m YTD 1y S&P 500 7537.43 2.49% 2.08% 10.11% 20.04% Nasdaq Composite 26,121.16 3.26% 1.60% 12.39% 26.79% 10-year Treasury 4.502 3.30 -2.00 33.00 9.20 Gold 4131.2 2.72% -3.58% -4.64% 24.78% Oil 69.25 -1.11% -21.93% 20.62% 1.57% Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Samsung (KR:005930) said it expects a 19-fold increase in second-quarter operating profits versus a year ago as shares of the microchip maker, as well as rival SK Hynix, ended lower in Seoul.

SpaceX (SPCX) will officially join the Nasdaq-100 on Tuesday as its underwriters launched coverage after a quiet period.

Iran's Islamic Revolutionary Guard Corps fired at two commercial ships near the Strait of Hormuz early Tuesday.

The U.S. trade balance is due at 8:30 a.m. The New York Fed's survey of consumer expectations is due at 11 a.m. The Treasury will auction $58 billion in three-year notes.

Sun Valley 2026 guest list: A mix of familiar moguls and newer AI names.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker Security name MU Micron SPCX SpaceX NVDA Nvidia TSLA Tesla MSFT Microsoft AMD Advanced Micro Devices TSM Taiwan Semiconductor Manufacturing PLTR Palantir AAPL Apple AMZN Amazon

Bees express likes and dislikes, scientists find.

-Barbara Kollmeyer

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