These Were the Best-Performing Asset Classes in May. Can They Continue to Lead?

May was broadly positive for risk assets, led by U.S. stocks up 5.2%, the S&P 500 up 5.3%, and the Nasdaq-100 surging 10.6% as mega-cap tech and AI-linked names outperformed. Foreign developed-market stocks rose 4.3%, emerging markets gained 1.6%, and several bond categories advanced, while commodities were the clear laggard, falling 7.5% with crude oil down 12.2% and gold down 1.5%. The article argues AI infrastructure spending continues to support tech leadership into June.

Analysis

The key signal is not simply “tech up,” but that the market is increasingly rewarding the parts of the AI stack with the shortest translation from capex to revenue. That favors memory, lithography, and enterprise software tied to infrastructure monetization, while leaving more speculative AI beneficiaries vulnerable to multiple compression if spending temporarily pauses. In practice, this is a late-cycle capex leadership regime: when hyperscaler spend is accelerating, suppliers with near-term pricing power can outrun the platform names for several months.

The second-order effect is that this rally is self-reinforcing for the semiconductor supply chain but not equally for every participant. Memory and equipment names tend to have higher operating leverage to incremental orders, so MU and AMD can continue to outperform on momentum, while ASML is a higher-quality but slower-moving expression of the same theme. NVDA remains the cleanest long-duration AI beneficiary, but after a sharp move the risk/reward is less attractive unless paired against a lower-quality AI proxy or bought on a volatility reset.

The commodity weakness looks less like a durable inflation call and more like a positioning unwind versus a growth repricing. That matters because if oil stays soft for another 4-8 weeks, it removes one of the few macro headwinds to equity multiples and supports the current duration trade; if oil rebounds quickly, the market may rotate out of crowded AI winners and back into energy/cyclicals. The contrarian risk is consensus becoming too convinced that AI capex is linear — any 1-2 quarter digestion in order books could hit the most levered names first, even if the structural story remains intact.

Key Decisions for Investors

• Long MU vs SOXX for the next 1-3 months: highest beta to AI infrastructure re-spend and strongest operating leverage if memory pricing stays firm; exit if the group underperforms semis for 2 consecutive weeks.
• Buy AMD on pullbacks, but fund it by trimming NVDA: AMD has more room for multiple expansion on share gains, while NVDA now needs continued flawless execution to justify upside; target a 2:1 reward/risk over 6-8 weeks.
• Maintain a tactical long ASML, but only as a lower-volatility AI capex hedge: best expressed as a 3-6 month position where order flow visibility matters more than near-term headlines.
• Pair long ORCL / short IWM for 2-4 weeks: enterprise software with AI monetization is being re-rated while small caps remain more exposed to slower growth and tighter credit; use a tight stop if rates fall sharply.
• Avoid chasing NFLX/INTC here: neither is a clean beneficiary of the current capital-spending impulse, and both are vulnerable to being crowding-finance sources if the AI trade de-risks.