Halo stocks are benefiting from the AI boom, Goldman Sachs says. Here are the European firms they're backing

Goldman Sachs advises investors to focus on “HALO” stocks (heavy assets, low obsolescence), arguing that higher real yields, geopolitical fragmentation, and supply-chain rewiring have shifted leadership back to tangible assets. The bank expects a global capex boom to benefit data centers, semiconductors, utilities, and defense—together projected to account for more than 40% of global capex this year—and reiterated a preference for companies accelerating capex. In its European “buy” basket, several defense and tech-exposure names stand out (e.g., Rolls-Royce +56% YoY; Rheinmetall -35% over 12 months; ASML/ASMI/Infineon highlighted), with Goldman noting short-term positioning may be challenging but the long-term setup is supportive.

Analysis

The investable edge here is not "buy Europe"; it is a factor rotation toward assets with pricing power over physical bottlenecks. The second-order winners are the toll collectors on AI/industrial capex: semiconductor equipment, grid/fiber owners, and defense primes where backlog visibility can re-rate even if near-term orders are lumpy. The losers are capital-light franchises that must suddenly spend like industrials to defend their moat, because incremental capex tends to compress FCF and raises the hurdle rate for buybacks.

Near term, this trade is vulnerable to its own popularity: a lot of HALO exposure behaves like a duration trade dressed up as value, so a further move up in real yields would hit utilities, telecom networks, and other "asset-heavy" names before the fundamental story has time to compound. In the next 1-3 months, the key catalyst is order intake and management commentary from ASML/SAFRY/BAESY/RNMBY; if capex guidance softens or defense procurement slips, the market will quickly punish the basket’s multiple expansion.

The contrarian view is that the market may be overpaying for scarcity of tangible assets while underappreciating operating leverage risk: once everyone chases the same infrastructure/defense basket, returns shift from fundamentals to positioning. I would be more selective than the theme suggests, favoring names with actual cyclical torque to capex visibility rather than pure yield proxies. Falsifiers are simple: a 50-75 bps drop in real yields, a pause in AI capex growth, or any evidence that defense budgets are being funded slowly rather than authorized loudly.

Key Decisions for Investors

• Long ASML on a 1-3 month pullback; use a 6-12 month horizon for the capex cycle, with upside if order momentum re-accelerates and downside if customer capex is deferred.
• Pair trade: long BAESY/SAFRY, short RNMBY for 3-6 months. Rationale: favor steadier backlog conversion over the highest-beta re-rating story; if European procurement gets delayed, RNMBY should underperform first.
• Initiate a small long basket in TELFY + DTEGY only as a rates-conditional trade, sized modestly because these are duration-sensitive. Best entry is after any real-yield selloff, with the thesis invalidated if financing costs keep rising.
• Set an alert rather than a trade on VEOEY/ENGIY/NEXNY: buy only if utility/grid spend starts showing through in order books. If capex announcements do not convert into revenue within 1-2 quarters, the multiple is likely to compress again.