Investors are finally starting to pay attention to traditional "capital-intensive" companies, not just because of data centers.

Investors are revaluing “Old World” capital-intensive assets, a trend that is spreading from data centers to broader real economy supply chains.

Bloomberg reports that on February 24, a Goldman Sachs research note highlighted that funds in the AI era are flowing into “hard assets, low obsolescence” (HALO) tangible assets, such as power grids, pipelines, utilities, transportation infrastructure, and key industrial capacities. These assets are difficult to replicate, have high physical barriers, and are less prone to becoming outdated.

(Since late February, a basket of HALO stocks has continued to rise)

Meanwhile, changes in U.S. tariff policies are also providing additional support for tangible asset transactions. Goldman Sachs preliminarily predicts that the tariff policy adjustments triggered by the Supreme Court ruling will reduce the actual U.S. tariff rate by about 100 basis points.

Although the direction of tariff policies remains uncertain, for infrastructure and industrial companies relying on physical imports, cost relief will further reinforce the short-term market tilt toward tangible assets.

Recently, Goldman Sachs strategist Chris Hussey emphasized that investors are assigning higher valuations to traditional capital-intensive companies, extending into supply chain upstream and downstream sectors and the broader economy.

Goldman Sachs’ Oppenheimer stated that this is the first time in nearly a quarter-century of internet commercialization that technological growth prospects have become highly dependent on tangible assets such as data centers and energy supplies.

Revaluation of tangible assets, from data centers to entire infrastructure chains

Goldman Sachs believes the underlying logic behind this round of revaluation of capital-intensive companies is: in a gold rush, the most stable beneficiaries are often the manufacturers of shovels.

Oppenheimer from Goldman Sachs pointed out that in the AI era, technological growth is increasingly reliant on visible, tangible physical assets, rather than the pure software and platform models that dominated the market over the past 25 years. This shift is leading to a reassessment of the strategic value of “hard assets.”

Goldman Sachs defines the most premium “HALO” targets as companies with the following two characteristics:

First, high asset reconstruction costs, deep regulatory barriers, long construction cycles, making them difficult to easily disrupt or replace; second, possessing long-term economic value. Focus areas include:

• Power grids
• Pipelines
• Utilities
• Transportation infrastructure
• Key mechanical equipment
• Long-cycle industrial capacities

Soft assets under pressure, AI disruption concerns driving valuation restructuring

On the other hand, soft assets are under continued pressure as tangible assets gain popularity.

Software, media, consulting, and some financial subsectors are facing market reassessment. In February, software and IT services stocks declined sharply again, with companies like INTU, WDAY, IBM, and ACN each falling more than 20% in a single month.

Market concerns center on AI potentially causing a “disintermediation” impact on these companies or opening the door for low-cost competitors, fundamentally damaging their business models.

However, Goldman Sachs analyst Gabriela Borges emphasized that not all software companies have the same business models. She pointed out that the ecosystem of agentic (intelligent agent) technology is evolving rapidly, making it highly challenging to assess ultimate value and set valuation floors. Therefore, it does not mean all software stocks should be sold.

Goldman Sachs believes investors can still focus on companies that can demonstrate their historical experience can deliver higher-quality AI results and maintain or improve fundamentals through profitability in the upcoming AI era.

Risk Warning and Disclaimer

Market risks exist; investment should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Investment is at your own risk.