The AI trade isn't over. But it's getting crowded—and a little predictable.
For much of the rally, capital has chased the same names: Nvidia Corp (NASDAQ:NVDA), Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META).
The logic was simple: own the builders of the future. Now, BlackRock is nudging investors to ask a more uncomfortable question—what if the better trade isn't selling AI at all?
HALO Trade: The Anti-Disruption Play
In a note published April 30, BlackRock argues "equity markets are growing more selective around AI exposure this year." Translation: the easy money in AI may already be spoken for.
In its place, the firm sees a rotation toward what it calls "HALO" sectors—short for Heavy Assets, Low Obsolescence. The idea is refreshingly grounded. These are businesses built on physical infrastructure that can't simply be coded away.
Think power plants, pipelines, energy grids. You can optimize them with AI. You can't replace them with it.
That distinction is doing a lot of work. The nightmare version of AI disruption—software replacing labor, platforms hollowing out industries—doesn't hit these businesses the same way.
A chatbot can't replicate a barrel of oil. An app can't stand in for a transmission network. These companies may bend with AI, but they don't break under it.
Powering AI May Be The Real Trade
BlackRock's most concrete bet sits in infrastructure. The firm says these assets offer a rare double play: they're harder to disrupt and they benefit from AI's expansion. As data centers multiply, so does their appetite for power—and someone has to supply it.
Enter Duke Energy Corp (NYSE:DUK). BlackRock points to the utility as a case study in how old-economy assets are quietly becoming AI-adjacent. The company uses AI to detect outages, isolate faults, and reroute power—with BlackRock citing company figures showing it helped avoid more than 280,000 outages, saving over 300,000 outage hours. Not flashy. But highly monetizable.
Diversifying Beyond The AI Hype
This isn't a call to dump AI winners. Even BlackRock isn't going that far. Instead, the message is subtler—and arguably more useful. As volatility creeps into AI-driven trades, investors may need to look beyond the obvious and start balancing exposure.
Because the next leg of the AI story might not belong to the companies building the future.
It might belong to the ones that physically power it. For investors looking to express that theme, ETFs such as the Defiance AI & Power Infrastructure ETF (NASDAQ:AIPO) and Tortoise AI Infrastructure ETF (NYSE:TCAI) offer targeted exposure to the infrastructure backbone powering the AI buildout.
Photo: Golden Dayz / Shutterstock
Login to comment