Goldman Sachs sees emerging-market capital-heavy stocks extending gains

Goldman Sachs is still finding upside in the part of emerging markets that looks least like the usual AI trade. Its latest call is that the capital-intensive names, the businesses tied to grids, utilities, industrials, and other long-cycle assets, have not only joined the rally but outpaced the lighter, asset-light parts of the market by a wide margin.

Heavy assets are doing the work

Goldman Sachs Research says a basket of emerging-market capital-intensive stocks has returned about 115% since late 2025, compared with 7% for capital-light equities, measured as of June 5, 2026. Even after that run, the capital-intensive basket still trades at roughly a 20% valuation discount to the capital-light basket, which is the kind of gap that keeps a lot of client conversations open on the trading desk.

That matters inside Goldman because the trade is no longer just about identifying where risk appetite is rising. It is about explaining why balance-sheet-heavy sectors can still look attractive even after a sharp move, and how that opportunity sits inside electricity grids, utilities, manufacturers, transport infrastructure, critical machinery, and other long-duration businesses. Those are the kinds of names that force bankers and analysts to think in terms of capex cycles, financing needs, and operating leverage, not just earnings momentum in software or consumer internet.

What HALO means in Goldman’s framework

Goldman labels this set of businesses HALO, short for Heavy Assets, Low Obsolescence. The framework is meant to capture companies with high barriers to entry and durable demand, the sort of businesses that do not get displaced quickly when conditions change.

Goldman introduced the broader HALO idea in a March 24, 2026 research note, arguing that higher real yields, geopolitical fragmentation, and supply-chain rewiring had shifted equity leadership back toward tangible productive assets after more than a decade of under-investment, especially in Europe. The logic is simple enough for a market note but broad enough to matter on a global coverage desk: when capital gets more expensive and supply chains get rewired, the companies that own hard assets, control bottlenecks, or provide indispensable infrastructure can regain pricing power and investor attention.

For Goldman staff, that changes the way the story gets sold. An analyst covering industrials or utilities cannot treat the AI boom as a pure software rerating anymore; the better pitch is often how the buildout of power, transport, and industrial capacity becomes the enabling layer underneath the technology trade.

Why Goldman thinks the rally can keep going

The June 26, 2026 emerging-markets note, written by Sunil Koul, Goldman Sachs Research’s head of global emerging market equities, and Tarun Lalwani, says the outperformance should persist because earnings momentum remains stronger in these sectors. Goldman also points to strategic investment, energy security, and geopolitical concerns as reasons capital keeps flowing toward tangible assets.

That view fits with Goldman’s broader take on emerging markets in 2026. The firm has said emerging-market equities were one of the year’s strongest asset classes, and that the rally had been supported by falling rates, Chinese export strength, earnings growth, and demand for geographic diversification. Goldman has also said 2025 was one of the strongest years for emerging-market assets since 2017, which gives the current move a longer runway than a short squeeze or a one-off sector rotation.

For the people at Goldman who have to turn macro into mandate, that is the real operational message. If clients are warming to capital-heavy emerging-market equities, then sector specialists, ECM bankers, and financing teams need to be ready with a coherent answer to the same question from different angles: which companies need capital, who can fund it, and which names can turn that spending into durable growth.

What it means for desks, coverage teams, and career development

This is where the story stops being a clean macro thesis and becomes a workflow issue. A stronger conviction in HALO names increases the value of employees who can cover infrastructure-heavy sectors, explain capex cycles to clients, and translate a broad macro narrative into specific opportunities in listed equities, financing, and capital markets.

For analysts and associates, that means the useful skill set is less about repeating that AI is driving markets and more about showing where the money actually lands. The best pitches are likely to come from people who can connect a power grid upgrade in one market, a manufacturing retooling in another, or a transport bottleneck somewhere else to a concrete trade idea or financing need.

That also changes how prestige gets earned inside the firm. The people who understand the industrial backbone of the AI era are the ones who can help clients see beyond the obvious hyperscaler trade and into the less glamorous assets that still capture real economic value. In a year when the market is rewarding tangible capacity, the Goldman employees who can explain it clearly will be the ones best positioned to win attention, mandates, and the next stretch of career momentum.

AI is widening the opportunity set

Goldman’s broader view is that AI is not staying confined to software. The firm says AI is driving rapid, capital-intensive industrial transformation across software, cybersecurity, robotics, defense, manufacturing, and more, which pulls the conversation toward physical infrastructure as much as digital tools.

That is why Goldman’s earlier HALO research cited grids, pipelines, utilities, transport infrastructure, critical machinery, and long-cycle industrial capacity as structural winners. The implication is that the AI trade is becoming a capital-allocation story, not just a theme trade, and the desks that can explain that shift will be better placed than the ones still treating AI as a narrow technology bet.

For Goldman’s clients and employees alike, the message is clear: the rally is broadening, and the opportunity is moving toward the teams that understand the assets behind it.