Driven by the artificial intelligence wave, investors’ attention is shifting from pure software concepts to the physical “foundations” that support the digital world. Recently, Goldman Sachs released a report indicating that a flow of capital is pouring into what it defines as “Hard Assets, Low Obsolescence” (HALO) physical assets, such as power grids, pipelines, utilities, transportation infrastructure, and critical industrial capacity. The common characteristics of these assets are that they are difficult to replicate, possess high physical and regulatory barriers, and are not easily rendered obsolete over time.
Goldman Sachs’ strategy team elucidated the logic behind this phenomenon: just like during the Gold Rush, the ones who consistently made money were those selling the shovels. Today, the growth prospects of artificial intelligence technology are increasingly dependent on tangible, physical assets like data centers and energy supplies. This marks the first time since the commercialization of the internet that technological development has become so highly reliant on physical assets. Concurrently, changes in U.S. tariff policies have also provided support for this trend. Goldman Sachs preliminarily predicts that related policy adjustments will lower the effective U.S. tariff rate by approximately 100 basis points. For infrastructure and industrial companies dependent on physical imports, this implies cost relief, further reinforcing the market’s short-term logic of tilting towards physical assets.
This revaluation of physical assets is spreading outward from data centers, affecting the entire infrastructure chain. Goldman Sachs emphasizes that assets characterized by high replacement costs, deep regulatory barriers, and long construction cycles are being repriced by the market. Its areas of focus specifically include power grids, pipelines, utilities, transportation infrastructure, key machinery and equipment, and long-cycle industrial capacity. Investors are assigning higher valuations to these traditionally capital-intensive companies, and this trend is extending along the supply chain into broader economic sectors.
In stark contrast to the fervor for physical assets, some “soft assets” are facing pressure. The business models of companies in sectors such as software, media, and consulting are being scrutinized by the market from a new perspective. In February, the software and IT services sector experienced a sharp decline, with individual stocks like Intuit (INTU), Workday (WDAY), IBM (IBM), and Accenture (ACN) all falling over 20% for the month. The market fears that artificial intelligence could cause a “disintermediation” shock to these companies, opening the door for lower-cost competitors and fundamentally altering their profit models.
However, Goldman Sachs analysts also cautioned that not all software companies will be equally impacted. With the rapid evolution of the AI agent technology ecosystem, assessing the ultimate value and valuation floors of different software enterprises has become extremely challenging, but this does not mean all software stocks should be sold off. Investors can still focus on companies that can demonstrate their ability to translate experience into higher-quality AI outcomes and maintain stable profitability or continuously improve their fundamentals in the AI era.
