1 Top ETF to Load Up On In May

Invesco QQQ is highlighted as a May buy with a forward P/E of 23, down from prior years, while tech earnings are projected to grow 38% in 2026 and 25% in 2027. The article argues that AI-driven earnings growth and lower valuations support further upside even after tech rallied 27% in April. Macro and geopolitical risks remain, but near-term recession risk is described as low.

Analysis

The market is starting to re-rate the AI complex from “story” to “cash-flow compounder,” and that matters more than the headline multiple. When forward earnings are rising faster than price, the index can sustain a high absolute P/E for longer without being fragile; the real vulnerability is not valuation level, but disappointment versus the now-lofty 2H26 margin and capex path embedded in estimates. That makes QQQ less a broad beta trade and more a barbell on a handful of execution-heavy platforms and chip leaders.

The second-order winner is the AI supply chain: every incremental dollar of model training and inference spend still cascades into semis, networking, and foundry capacity before it reaches software monetization. NVDA remains the cleanest expression because it sits at the center of both compute demand and pricing power, while INTC is more of a lagging beneficiary that needs evidence of share gain or margin stabilization to participate meaningfully. If enterprise AI spend broadens beyond hyperscalers, the next beneficiaries are likely the picks-and-shovels adjacencies rather than the consumer internet names.

The contrarian risk is that investor positioning is already crowding into the same narrow leadership names after the April reversal, making the trade vulnerable to any downgrade in capex intensity, export-control noise, or a rotation out of duration-like growth if rates back up. A flatter earnings revision cycle in 60-90 days would be enough to compress the multiple again even if the macro backdrop remains benign. In other words, the market is pricing a clean runway; the path matters more than the destination.

Net: the setup supports staying constructive, but with a preference for leaders that can self-fund growth and monetize AI immediately. I would treat the current move as underappreciated in magnitude but overowned in composition, which argues for selective longs rather than passive index exposure.

Key Decisions for Investors

• Long NVDA vs QQQ on a 1-3 month horizon: own the dominant AI cash-flow engine while hedging broad index beta; target 8-12% upside if semis keep leading, with roughly half that downside if momentum stalls.
• Avoid chasing INTC on outright basis; use it only as a tactical call option on any evidence of share gains or margin inflection. If you want exposure, buy on post-earnings weakness rather than into strength.
• If still underweight tech, scale into QQQ only on pullbacks of 3-5% or after a short-term volatility spike; the risk/reward is favorable when earnings revisions are intact, but poor if entered after a vertical extension.
• Pair trade: long NVDA / short a low-quality software basket over the next 1-2 quarters. If AI spend continues to concentrate in infrastructure, the spread should widen as investors keep paying for visible monetization and punishing laggards.
• Buy protection on QQQ via 30-60 day put spreads into any further melt-up. The crowding risk is asymmetric: a modest macro wobble can take 5-8% out of the index quickly while leaving the fundamental AI story intact.