HALO stocks are companies with Heavy Assets, Low Obsolescence — businesses that own essential physical infrastructure or tangible assets that are difficult to replace and are less vulnerable to disruption from artificial intelligence (AI).
Unlike software or digital businesses that could be disrupted by AI, HALO companies derive their competitive advantage from physical assets, regulated operations and long-term contracts.
Per Roundhill Investments, “HALO stocks are companies built on tangible, hard-to-replicate physical infrastructure and entrenched operating footprints, making their economic moats inherently resistant to breakthroughs in artificial intelligence.”
Key characteristics of HALO stocks are that they own hard-to-replicate physical infrastructure, generate stable cash flows from essential services and steady demand, are less exposed to AI-driven disruption, benefit from long-term secular trends such as infrastructure spending, electrification, reshoring and industrial investment, and often operate in regulated or capital-intensive industries.
What Does Wall Street Think About Halo Stocks?
According to a Goldman Sachs Group Inc. strategist, capital-intensive companies or HALO companies are likely to report solid earnings this season, further outperforming peers that are more reliant on human or digital assets, as quoted on Bloomberg.
“Investors remain under-positioned for a world in which physical assets, infrastructure and industrial capacity regain strategic importance,” the team, including Guillaume Jaisson, said, as mentioned in the same Bloomberg source.
Time to Play HALO Stocks & Sector ETFs?
With geopolitical tensions doing rounds since the start of this year and AI stocks being guilty of overvaluation concerns, and delivering inadequate returns on investments, exposure to HALO stocks and sectors seems to be an intriguing idea.
Roundhill HALO ETF LOHA is a pure play built on this concept. LOHA seeks to track the performance of the Akros U.S. Heavy Assets Low Obsolescence (HALO) Index.The fund is insulated from AI-driven disruption, with physical assets and essential services that large language models or agentic AI cannot easily dislocate.
No stock accounts for more than 1.17% of the fund. Industrials (37.46%), Materials (15.96%), and Consumer Staples (15.85%) are the top three sectors of the fund.
Sector ETFs in Focus
Materials – State Street Materials Select Sector SPDR ETF XLB
Full-year 2026 earnings estimates have increased for 11 of the 16 Zacks sectors since the start of March. Basic Materials, Industrials and Utilities sectors have undergone pronounced gains, per the Earnings Trends issued on July 8. The Basic Materials sector is expected to record 44.6% growth in earnings in Q2 of 2026, over 14.2% rise in revenues. The XLB ETF has a Zacks Rank #2 (Buy).
Industrials – State Street Industrial Select Sector SPDR ETF XLI
The U.S. industrials sector is experiencing a broad-based revival, with industrial production rising 1.7% year-over-year in May. Driven by aerospace/defense, tech infrastructure (data centers), and automation, sector earnings are projected to post double-digit growth.
Note that the Industrial Products sector is expected to log 10.4% growth in earnings in Q2 of 2026, over 9.1% rise in revenues. The XLI ETF has a Zacks Rank #2.
Utilities – Vanguard Utilities Index Fund ETF Share VPU
The utility sector has been an area to watch lately, given investors’ drive toward safety in defensive investments.Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market. The utilities sector is expected to register 13.9% growth in earnings in Q2 of 2026, over 7.1% rise in revenues. The XLU ETF has a Zacks Rank #2.
Infrastructure – First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF GRID
The current energy crisis amid the Iran war has led several countries to opt for alternative energy sources. Hence, clean energy has received more popularity in recent days. The underlying Nasdaq Clean Edge Smart Grid Infrastructure Index tracks the performance of common stocks in the grid and electric energy infrastructure sector.
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State Street Materials Select Sector SPDR ETF (XLB): ETF Research Reports
State Street Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
Vanguard Utilities Index Fund ETF Shares (VPU): ETF Research Reports
First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID): ETF Research Reports
Roundhill HALO ETF (LOHA): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).