Investors should consider “HALO” stocks for longer-term investments, according to a Goldman Sachs equity strategist.

HALO stands for “Heavy Assets, Low Obsolescence” and is a strategy that involves investing in stocks associated with sectors considered resilient to disruptions from artificial intelligence.

Sharon Bell, a senior European equity strategist at Goldman, says in a new interview that HALO stocks are primed to emerge as “structural winners.”

“And by that, I mean things like utilities, telecoms, industrials, even energy companies that are investing and have good assets and can make return on those assets. And I think Europe has a lot of those. I also like our renewables companies, defense companies, aerospace companies. I think the tech sector in Europe trades at a discount to similar companies elsewhere in the world.”

Bell also says banking stocks could witness gains.

“We think interest rates will be higher for longer and that will help the bank sector.”

The strategist says investors can get positive returns out of European stocks, but she still believes US and Asian equities will outperform.

“So we would have the US outperforming because it’s got big hyperscalers where we’re expecting pretty good returns. And we’re looking for an economy which actually is growing quite nicely in the next couple of years in the US. So we do think the US market continues to outperform Asia as well. We see [it] driven by earnings, driven by the semi stocks and driven by the tech sector.”

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Fundstrat technical strategist Mark Newton says the US stock market is poised to broaden beyond semiconductors and memory stocks, warning that tech has gotten “over its skis” after an 18% rally in eight weeks and is likely to consolidate through the summer.

Speaking in a recent interview, Newton identified financials, industrials, consumer discretionary, and healthcare as the sectors best positioned to play catch-up as technology cools. He noted that the XHS healthcare services ETF recently broke to new all-time highs, calling it an encouraging sign that broadening is underway.

“I am optimistic that we can start to broaden out. I do suspect that technology is going to need to consolidate at some point in June and or July. Difficult to see an 18% rally in 8 weeks just continue at the same pace. It’s highly unlikely, and we’re going to need to consolidate.”

Newton said the overall market is not overextended, but many investors have been cautious amid a leadership transition at the Federal Reserve and lingering geopolitical tensions. He noted that investors who lack sufficient exposure to high-weighted semiconductor and memory names have struggled to keep pace with the S&P 500.

Newton said he is not bearish and expects the consolidation in tech between July and October to create buying opportunities heading into the midterm elections.

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