Physical Assets Beat Software in the AI Era, Says Ritholtz CEO
Josh Brown, CEO of Ritholtz Wealth Management, argues that companies with heavy physical assets and low obsolescence risk are emerging as the best positioned to weather AI disruption. His "HALO" framework flips the script on a decade of capital-light software dominance.
Brown outlined the strategy on this week's episode of WSJ's Take On the Week, a podcast that examines markets, earnings, and finance. The insight challenges the conventional wisdom that drove valuations for software and tech companies over the past 15 years.
Why Physical Moats Matter Now
Large language models can replicate software capabilities, compress margins, and displace workers in knowledge-based roles. They cannot, however, move earth, serve food, or stock shelves. That distinction matters for investors.
Brown identified Caterpillar, McDonald's, and Walmart as examples of companies with durable competitive advantages that AI cannot easily erode. Their physical infrastructure, supply chains, and real-world operations create moats that software-based competitors cannot cross.
The shift reflects a broader reassessment of where capital should flow as AI capabilities mature. Instead of betting on the next unicorn, investors are looking at unglamorous incumbents with tangible assets.
This Week's Earnings and Market Moves
Co-hosts Telis Demos and Miriam Gottfried examined earnings from Apollo Management, KKR, and Sixth Street Specialty Lending-all major players in private markets. The episode also previewed upcoming reports from Disney and McDonald's.
The Federal Reserve's power dynamics shifted this week as Kevin Warsh's nomination for chair moved toward confirmation, a development that will affect monetary policy and market conditions ahead.
For executives and strategists, the HALO framework offers a concrete lens for evaluating which business models will withstand AI-driven disruption. The question is no longer which companies are growing fastest, but which ones own assets that competitors cannot easily replicate.
More analysis appears on AI for Executives & Strategy and AI for Finance.
Your membership also unlocks:
