Software ETF Down 25% as Hyperscalers Plan $1.5 Trillion AI Capex
iShares Expanded Tech-Software Sector ETF fell 25.0% as Goldman Sachs highlights a shift to HALO stocks, noting U.S. hyperscalers will spend $1.5 trillion in capital expenditures from 2023 to 2026, with 2026 capex exceeding $650 billion alone. Capital-light software valuations have repriced due to AI’s disruption to margins and terminal values.
1. HALO Framework Gains Traction
Goldman Sachs has introduced the HALO (Heavy Assets, Low Obsolescence) framework, spotlighting companies with substantial physical capital and limited technological obsolescence. This paradigm favors utilities, energy, telecom and industrial infrastructure over software and digital platforms.
2. Hyperscaler Capex Surge
U.S. hyperscalers have embarked on an unprecedented investment cycle, deploying roughly $1.5 trillion in capital expenditures from 2023 to 2026. In 2026 alone, spending is on track to exceed $650 billion as AI computing demands accelerate infrastructure build-out.
3. Impact on Tech-Software ETF Performance
iShares Expanded Tech-Software Sector ETF has dropped roughly 25.0% over the past year as investors reprice long-term margins and terminal values for SaaS models. The rotation into capital-intensive industries reflects a shift in earnings momentum and valuation convergence between growth and value sectors.