Goldman Sachs: Investors are finally starting to pay attention to traditional "capital-intensive" companies.

Investors are re-pricing "old world" capital-intensive assets, and this trend is spreading from data centers to a broader range of physical economic supply chains. Wall Street News mentioned that on February 24th, a Goldman Sachs research report suggested that funds in the AI era are flowing towards "heavy asset, low obsolescence" (HALO) physical assets such as power grids, pipelines, utilities, transportation infrastructure, and critical industrial capacity. These assets are difficult to replicate, have high physical barriers, and are not easily outdated. (Since late February, a basket of HALO stocks has been continuously rising) At the same time, changes in U.S. tariff policies are providing additional support for physical asset trading. Goldman Sachs preliminary predicts that the tariff policy adjustments triggered by Supreme Court rulings will reduce the actual U.S. tariff rate by approximately 100 basis points. Although there is still uncertainty regarding the direction of tariff policies, the easing of costs for infrastructure and industrial companies that rely on physical imports will further strengthen the short-term logic of the market leaning towards physical assets. Goldman Sachs strategist Chris Hussey emphasized that investors are giving higher valuations to traditional capital-intensive companies and extending their focus to the upstream and downstream of the supply chain as well as to broader economic sectors. Goldman's Oppenheimer explained that for the first time since about a quarter of a century of commercialization of the Internet, the growth prospects of technology are highly dependent on physical assets such as data centers and energy supply. Revaluation of physical assets, from data centers to the entire infrastructure chain Goldman believes that the underlying logic behind the revaluation of these capital-intensive companies is that in a gold rush, the most stable beneficiaries are often the manufacturers of shovels. Goldman Oppenheimer pointed out that the growth of technology in the AI era is increasingly relying on tangible physical assets rather than the software and platform models that have dominated the market in the past twenty-five years. This judgment has led to a revaluation of the strategic value of "hard assets." Goldman defines companies with the following two characteristics as the best "HALO" targets: 1. High asset reconstruction costs, deep regulatory barriers, long construction cycles, difficult to be easily disrupted or replaced. 2. Long-term economic value. The specific areas of focus include power grids, pipelines, utilities, transportation infrastructure, critical machinery, and long-cycle industrial capacity. Pressure on soft assets, valuation restructuring due to AI disruption concerns On the other hand, while physical assets are in demand, soft assets continue to face pressure. Software, media, consulting, and some financial sub-sectors are undergoing a market reevaluation. In February of this year, software and IT service stocks once again plunged significantly, with individual stocks such as INTU, WDAY, IBM, and ACN all experiencing monthly declines of over 20%. There are concerns in the market that artificial intelligence will have a "disintermediation" impact on these companies or open the door for low-cost competitors, fundamentally undermining their business models. However, Goldman analyst Gabriela Borges emphasized that not all software companies have the same business model. She pointed out that the intelligent agent technology ecosystem is evolving rapidly, making it extremely challenging to assess the ultimate value and set valuation thresholds, so not all software targets should be sold off. Goldman believes that investors can still focus on companies that can demonstrate that their historical experience can bring higher quality AI results and maintain stable or improved fundamentals in the upcoming AI era. This article is sourced from Wall Street News, written by Bai Yilong; edited by GMTEight: Wenwen.