Constraint Capital #3 - Mar 2026
Constraint Capital Issue #3 breaks down Heavy Assets, Low Obsolescence (HALO) opportunities and the constraints blocking a potential global intelligence crisis.
February 2026 was defined by a sharp pivot: the "Asset Light" era of software dominance is being overwhelmed by a gritty, physical reality. While generative AI continues to accelerate, investors are seeking refuge in tangible moats (HALO) and bracing for the systemic fallout of a world where human intelligence is no longer a scarce resource (The 2028 Global Intelligence Crisis). Let’s take a look at the origins of each of these.
Heavy Assets, Low Obsolescence, or HALO, was coined by Josh Brown in a blog post on February 8th. For fifteen years, the market worshipped “Asset Light” business models—software companies with high margins and recurring revenue. However, the rise of agentic AI (like Claude Code and Codex) has turned these recurring revenues into disruptable targets. But the physical assets needed to power agentic AI are significantly constrained. Here’s a passage from Josh which sums up the rationale behind Constraint Capital:
Energy stocks, with a few exceptions, are HALO - Heavy Assets, Low Obsolescence. You get it now? This is the sweet spot of the stock market.
These are the names you can buy and not worry about. They can be thought of as potential beneficiaries of AI given the extensive costs of their existing operations, marketing, service delivery and decision-making processes. Or you don’t even have to go that far - you can just look at them and apply the following simple test: Will chatbots and LLMs lessen or eliminate the need for (blank) in the near future?
And some additional commentary from around the Internet
The Halo effect: Heavy asset, low obsolescence . . . high returns? /FT/
Every previous technology wave concentrated more value in the orchestration layer and less in the physical layer. The most valuable electricity-era companies were the ones building appliances and media on top of cheap power, not the plants generating it. The most valuable internet-era companies were the ones organizing information and attention, not the ones laying fiber. AI follows the same playbook. The models capture more value than the data centers running them, and that spread is growing every quarter. /Aakash Gupta on X/
All content published on this newsletter is based on public information and independent research. Opinions are authors own and have been sanitized through AI engines which can make mistakes. This newsletter is not financial advice, and readers should always do their own research before investing in any security.
While HALO represents one strategy for understanding the markets, the 2028 Global Intelligence Crisis published February 22th, is a chilling thought exercise regarding the systemic consequences of AI being too successful. It describes a phenomenon coined the “intelligence displacement spiral.” Read the piece in full below:
Ultimately, the crisis isn't caused by AI failing, but by AI working perfectly. The article outlines a sequence of events that lead to a Ghost GDP—high productivity numbers that don't circulate in the real economy.
But the thought exercise was met with some rebuttals:
Gavin [Baker]: "The world is fundamentally short both watts and wafers and it may take years to resolve these shortages. The shortage of watts and wafers may prevent an overbuild - hyperscalers would overbuild if they could, but they simply cannot... My best guess is that we would need roughly 1000x more compute for the unlikely hypothetical scenario described by Citrini to be remotely possible and the time it takes us to get there will give humans time to adjust and maximize the many potential benefits of AI."
Shanu Mathew on X
The 2026 Global Intelligence Crisis /Citadel Securities/
Citrini’s Dystopian AI Vision Draws Global Investor Criticism /Bloomberg/
So where does this leave us? Constraint Capital Issue #3 breaks down HALO opportunities and the constraints blocking a global intelligence crisis. 👇