The Halo trade has emerged as investors seek refuge from AI disruption, favoring companies with heavy physical assets and long-lived business models. The strategy gained momentum this year as concerns grew about AI's potential to replicate software and intellectual property, making traditional asset-heavy industries like utilities, mining, and energy attractive.

Josh Brown, CEO of Ritholtz Wealth Management, coined the Halo acronym and thesis, which includes semiconductor makers and infrastructure companies with high capital expenditure. Goldman Sachs strategist Guillaume Jaisson notes these companies score high on fixed assets, tangible assets per employee, and capital intensity. Taiwan Semiconductor Manufacturing Corporation exemplifies this with $32 billion in annual capital spending since 2020.

While some view Halo as a modern twist on the old economy versus new economy debate from the 1990s tech bubble, Brown argues it's distinct because it includes technology companies that must constantly invest in innovation. The strategy's future hinges on earnings growth rather than cheap valuations, with Jaisson pointing to widening earnings-per-share growth gaps. However, critics like Patrick Kaser of Brandywine Global question its investability at current valuations, suggesting the theme may have limited legs without the valuation discount that initially attracted investors.