Here’s the thing nobody wants to admit: the stock market isn’t flat. It’s having an identity crisis, and it’s absolutely brutal for anyone who bought the “software will eat the world” narrative.
On the surface, the S&P 500 looks like it’s napping. But underneath? There’s a full-blown civil war happening. On one side, software companies like Salesforce, Adobe, and Figma are getting absolutely demolished—down 30% or more in just two months. On the other side, companies that make cooling systems and power infrastructure are up 50%. It’s like watching the cool kids get dethroned while the kids who fix HVAC systems suddenly became prom kings.
Welcome to the HALO trade: Hard Assets, Low Obsolescence. And it’s the hottest thing on Wall Street right now.
Why Software Got Wrecked
Remember when everyone said AI would make everything better? Turns out, that was the problem. AI got too good. Now it can actually replace the software companies that were supposed to benefit from it.
Think about it: You can spin up a functional CRM system using ChatGPT in an afternoon for a few hundred bucks. Why pay Salesforce $50,000 a year? A developer can build a basic social platform in a few hours of prompting. Why does Reddit need to exist? This isn’t theoretical anymore—it’s happening right now, and investors are pricing in the existential threat.
Why Physical Assets Are Suddenly Winning
Here’s the asymmetry that matters: AI is a digital tool. It’s brilliant at information work, but it can’t mine copper, build pipelines, or cool down a data center. Not yet, anyway.
That means physical businesses—the ones that actually make things—suddenly have a moat that AI can’t dissolve. For the last 15 years, the market punished anything physical. Asset-light SaaS companies got 60x multiples. Factories were boring. Now the script flipped. If you manufacture semiconductors, generate power, or build infrastructure, AI isn’t your enemy—it’s your productivity tool.
The Two Flavors of HALO
The offensive play: Companies selling the picks and shovels of AI infrastructure. Taiwan Semiconductor, Vertiv (which cools Nvidia’s GPUs), Constellation Energy (selling nuclear power to Microsoft and Meta). These companies have direct revenue tailwinds from AI spending. Every dollar hyperscalers pour into data centers flows through their income statements.
The defensive play: Physical-world businesses using AI to run better. Walmart optimizing logistics. Caterpillar deploying autonomous trucks. FedEx cutting fuel costs with route optimization. These won’t explode like infrastructure plays, but they’re basically immune to the disruption obliterating their digital counterparts.
The Bottom Line
The market changed. Energy is up 22% year-to-date. Materials up 18%. The Magnificent Seven? All in the red. The old playbook—growth at any cost, software forever—is dead. Capital is already rotating.
The smart move isn’t chasing stocks that have already doubled. It’s finding HALO companies that haven’t been fully re-rated yet. The framework is clear; the homework is on you.