Dump Trucks and Data Centers—1st Quarter 2026 Commentary

Dump Trucks and Data Centers

“I want to be a worker on the highway. I want to drive a really big bulldozer.” So said my oldest child, Ben, back when he was about five years old, in answer to my question about what he wanted to be when he grew up. “Me too!” said his little brother, Carlton. “I want to work with Ben, and I want to drive a really big bulldozer and Ben can drive a dump truck!” “No, I’ll drive the bulldozer and you drive the dump truck,” Ben corrected him. “Okay, Ben,” Carlton agreed. Carlton was always the most agreeable little brother. “Really big?” I’d ask. “Yeah, a really big dump truck with those really big tires!” Carlton would say. “We can move all the dirt and build really tall bridges! Vroom, vroom!” This conversation occurred frequently as we witnessed the endless lane-widening construction project along I-77 on our weekly drives from north Mecklenburg County to Charlotte and back.

Benton Bragg working hard with Carlton and Ben

Perhaps influenced by their enthusiastic father, the young fellows took these career aspirations seriously. I read to them every night; their hands-down favorite bedtime book was Richard Scarry’s Cars and Trucks and Things That Go—we must have read it a thousand times. Like the toy closets of many young families with boys, ours had an oversupply of trucks, tractors, bulldozers, cranes, backhoes, and even a fully operational excavator, transported by a massive tractor trailer. This was a “low-boy trailer” and the excavator could drive right up on it without ramps! The boys each had hardhats, toolbelts and plastic radios. They took to role-playing, talking in gruff, manly voices and even addressing each other as “Sir.” Ben, being older, was naturally the foreman and Carlton was the worker. “Sir, are you ready to work today?” “Yes sir, we’ll get this big pile of dirt moved and then we’ll dig a really big hole.” Simple times.

The boys and I never talked about artificial intelligence (AI) back then. Maybe we should have.

It seems AI is what everyone is talking about these days. From the standpoint of investors, it is a worthy conversation. AI is moving markets—witness the recent carnage in the stocks of traditional software companies as investors concluded that AI would wreak havoc on this long-profitable business model. And no surprise, Wall Street has a new acronym; it’s hard to open a financial publication or turn on CNBC these days without encountering it. HALO—Heavy Assets, Low Obsolescence—is the acronym coined by Josh Brown of Ritholtz Wealth to describe an investing framework that has captured the imagination of institutional money managers, research desks at Goldman Sachs and Morgan Stanley, and a growing number of individual investors who have grown anxious about artificial intelligence and what it means for the companies in their portfolios. The HALO trade, as it has come to be called, recommends a rotation away from the asset-light, high-margin software and knowledge-economy companies that dominated the previous decade and into the businesses of the physical world—the pipelines, refineries, utilities, railroads, quarries, chocolate factories, and grain elevators that no large language model like ChatGPT can easily displace. Should we all become HALO investors?

It is not a foolish question. In fact, there is a reasonable case to be made that the pendulum has swung too far toward asset-light businesses and that the next chapter may belong to owners of the hard stuff. After all, a bulldozer isn’t manufactured with a few keystrokes on a computer. Electricity does not flow because someone built a clever app. Data centers, transmission lines, copper mines, steel mills, pipelines, rail systems, warehouses, turbines, military hardware, and machine tools are not optional in a world that wants more AI, more electrification, more domestic manufacturing, enhanced national security, more housing, better roads, and more resilient supply chains.

As we wrote in our commentary New World Order in March of 2025, the world has become less frictionless, less predictable, and less interested in globalization. In that kind of environment, redundancy matters, resilience matters, and productive capacity close to home matters. That is fertile ground for the HALO thesis.

If the last thirty years were defined by globalization, software, outsourcing, just-in-time inventory and capital-light business models, perhaps the next ten will be defined by redundancy, reshoring, power demand, industrial policy, and the rising value of scarce physical assets. A less frictionless world may reward those who own essential infrastructure, superior equipment, manufacturing prowess, and productive capacity. That is the heart of the HALO argument.

There is also a valuation argument behind the shift away from knowledge-economy stocks and into physical-economy stocks. For years, investors have rewarded software, finance, and other asset-light companies with premium multiples. That made sense. These businesses often offered high margins, recurring revenue, global scalability, and relatively low capital requirements. But when a thesis becomes universally loved, it often becomes expensive. At some point, the market stops rewarding excellence and begins demanding perfection. When that happens, even very good financial results may not meet the lofty expectations of investors.

Seen through that lens, HALO investing can sound refreshingly grounded. Own the businesses tied to physical necessity. Own the companies that move dirt, generate power, transport freight, build infrastructure, mine and process materials, and maintain critical systems. Own the firms that will benefit if AI turns out to be not only a software story but also an electricity story, a cooling story, a construction story, and a metals story. One can make that case with a straight face, and to be sure, Wall Street is rolling out expensive products to serve up this exact portfolio. Holdings might include utilities, pipeline operators, railroads, aggregates producers, industrial distributors, machinery manufacturers, miners, engineering and construction firms, upstream and midstream energy companies, and real-asset owners with difficult-to-replicate infrastructure. The argument is simple: if the world needs to build more, power more, move more, and secure more, then the owners of essential hard assets may be positioned to do quite well.

That is the case for HALO. While it is a logical argument, I think it is also somewhat lazy, at least in its most aggressive form which calls for the wholesale abandonment of software and knowledge-economy companies. It is a strategy based on scarcity when the future promises to be a time of abundance. Now let’s make the opposite case, one that I think is every bit as strong and perhaps stronger.

First, and perhaps most obvious, operating a manufacturing concern, dealing in commodities like oil, iron ore, or other aggregates, operating an airline, rail business or construction firm, or generating electricity can be a wonderful business but it can also be a lousy business. Tangibility doesn’t necessarily equate to quality or profitability. A company can own billions of dollars of physical assets and still produce mediocre returns or even losses for shareholders. In fact, many hard-asset industries have long histories of overbuilding, intense price competition, cyclicality, leverage, heavy regulation, and poor capital allocation.

Owning a mine, a factory, a fleet, or a pipeline does not guarantee strong economics. In many cases, these capital-intensive companies carry significant debt resulting in tremendous operating leverage (good and bad) which results in volatile returns to investors. Companies like Ford Motor, Boeing, and Caterpillar may have three banner years followed by three “rebuilding/restructuring” years.

Hard-asset businesses are often hungry businesses. They need capital, and then more capital. Mines deplete. Wells decline. Networks age. Equipment wears out. Plants become obsolete. Environmental liabilities emerge. Regulators crash the party. A business that must reinvest continuously simply to maintain its position can look attractive in theory and disappointing in practice. By contrast, a successful software platform can develop a product once and sell it repeatedly with attractive incremental economics.

Second, Wall Street and the media can always be counted on to package complexity into investable stories. Recall the Nifty Fifty as far back as the 1960s and ‘70s. More recently, we have the New Economy, Home Prices Have Never Declined, Buy the Dip, BRIC/BRICS, ESG, FANG/FAANG/FAANGM, the Magnificent 7, Stay-at-Home Stocks, Reopening Trade, Higher for Longer, Soft Landing, and on and on. In addition to selling advertising on CNBC and Bloomberg, each of these:

1. Retrofits past winners into a compelling narrative
2. Creates urgency or inevitability
3. Supports product creation or trading activity
4. Breaks down when leadership rotates

Finally, software is not going away. Some investors seem eager to jump from “AI is powerful” to “software companies are doomed”—a huge leap predicated on a simplistic argument. New technologies often disrupt old business models, but they also create new ones. Over the last two hundred years, businesses have been forced to adapt through wave after wave of technological change. Some failed. Many adjusted. Some emerged stronger than before. Knowledge businesses are not suddenly irrelevant because the world has rediscovered the importance of physical infrastructure. If anything, hard assets and software are becoming more intertwined, not less. The electric grid needs software. Modern factories need software. Warehouses, hospitals, rail systems, aircraft, banks, farms, and industrial control systems need software. In many cases, software does not replace the hard asset; it makes the hard asset more useful, more productive, more resilient, and more profitable.

There is no obvious reason to assume software companies are uniquely incapable of adapting. Many already possess what adaptation requires: distribution, engineering talent, customer relationships, data, recurring revenue, and products that sit directly inside the critical workflows of thousands of companies. Those are not trivial advantages. In fact, they may be exactly the advantages that allow some software firms to incorporate AI tools faster, reduce costs more effectively, deepen switching costs, and widen their lead over smaller competitors.

This dynamic is already visible in the software industry’s response to artificial intelligence. In one example, Microsoft, a software company which owns a large stake in OpenAI (ChatGPT) and has embedded Copilot (OpenAI) across its entire product suite, is not a victim of AI—it is one of its primary beneficiaries.

The HALO argument assumes that the management teams, engineers, and salespeople at these firms are standing still while the world changes around them. They are not. They are getting up every morning and scrambling with extraordinary urgency to adapt, compete, and remain relevant. This is what businesses do. This is, in fact, what businesses have always done. The creative destruction that Austrian economist Joseph Schumpeter described in his 1942 book Capitalism, Socialism, and Democracy does not simply destroy; it destroys and creates simultaneously, often within the very institutions it appears to threaten. The companies best positioned to harness AI may well be the ones that already understand software and data at the deepest level.

I’ll bring up valuation again. Many of the asset-light software companies that are said to be in AI’s crosshairs have already experienced substantial multiple compression. The market, which is reasonably efficient over time, has already priced in a significant amount of disruption risk. Meanwhile, HALO stocks—Exxon, Caterpillar, Union Pacific Railroad, and the rest—have risen sharply in 2026, and their valuations are no longer as modest as the HALO narrative implies. Buying what is already expensive while chasing a compelling narrative is a reliable path to disappointment. The best investment opportunities are rarely found where the consensus has already arrived.

So no, we would not argue that investors should sell all of their software stocks, all of their service companies, all of their healthcare platforms, or all of their financial companies. And we would not argue that investors should load up exclusively on pipelines, utilities, metal producers, and heavy industrials just because the macro story sounds compelling. That kind of all-or-nothing thinking usually creates more excitement than good investment results.

So where does that leave us? It leaves us in a familiar place, which is often the right place.

We think it makes sense to own a diversified portfolio of businesses that are well-managed, financially sound, and reasonably valued. We include within that portfolio a meaningful allocation to the kinds of hard-asset, physical-economy businesses that the HALO framework celebrates. We also include a meaningful allocation to technology and software companies that have demonstrated the capacity to adapt and grow through technological change. So yes, we own companies that build infrastructure, manufacture equipment, deliver goods, mine metals, drill for oil, generate electricity, and that make systems run. These businesses will benefit enormously as the AI buildout proves power-hungry, capital-intensive, and infrastructure-heavy. These holdings are a crucial part of a diversified portfolio and we’ve always owned them. And yes, we continue to own knowledge-economy stocks that we think will thrive as AI becomes a productivity tool embedded inside every business including software, consulting, healthcare, logistics, finance and every other sector. In each case, we’ll own shares of enterprises staffed by people who are adapting, competing, and trying to earn a return on capital in a changing world.

In closing, I’ll return to abundance versus scarcity. The HALO thesis is ultimately a bet on scarcity–that we need to invest in the companies that will survive a coming storm. We are more drawn to abundance. Technological revolutions create dislocation, yes, but they also move human civilization forward, creating convenience, better health, longevity, education, and prosperity. Our instinct is to invest not merely in survival stories but in builders, adaptors, and winners of the age ahead. The market will sort out the winners and losers. Our job is to ensure that our clients own enough of the winners—across enough different types of businesses—that the sorting goes well for them regardless of how the AI story ultimately unfolds.

As always, we are grateful for your trust and your partnership.

This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.