Dell, Micron Lead May US Stocks, AI Drives S&P Nine-Week Streak, May Performance Breaks "Sell Curse".

TradingKey - Driven by the dual factors of market optimism regarding a potential U.S.-Iran ceasefire agreement and the continued momentum in the artificial intelligence sector, U.S. stocks experienced a strong rally.

On the final trading day of May, tech stocks collectively rallied following Dell's better-than-expected earnings, driving the three major U.S. indices to once again set new record closing highs. This monthly performance not only broke the traditional "Sell in May and go away" hex, but the S&P 500 also established a rare nine-week winning streak, marking its longest rally since December 2023.

According to Bloomberg data, the S&P 500's nine-week winning streak has occurred only a handful of times in the past 40 years. From a broader perspective, the index has rebounded nearly 20% from its March lows, marking a rally seldom seen in more than four decades.

Although eight of the S&P 500's 11 sectors declined in May, the index still recorded its best performance for the month since the 1990s, with a cumulative monthly gain of 5.1%, buoyed by a powerful surge in the information technology sector.

In terms of individual stocks, Dell Technologies ( DELL) became the brightest star in May. The company's fiscal 2027 first-quarter report showed a 757% year-on-year surge in AI server revenue and a significant upward revision of its full-year guidance, sending the stock soaring 33% in a single day and bringing its cumulative monthly gain to over 100%.

Micron Technology ( MU) saw its share price surge nearly 90% for the month, marking the company's largest single-month gain in more than 40 years. Driven by the explosion in demand for AI memory chips and public support from Trump, its market capitalization surpassed the $1 trillion milestone.

Monitoring service provider Datadog ( DDOG) followed closely with a monthly gain of 87%, becoming a prime representative of the software stock rebound amid the AI wave.

It is worth noting that Microsoft ( MSFT ), though not among the top gainers, saw its 10% monthly rise in May represent a significant improvement from its 15.7% cumulative decline from the start of the year through the end of April, highlighting the overall strength of the tech sector's rebound.

Driven by U.S.-Iran Negotiations and AI Prospects

As the core engine of the current rally, tech stocks staged a comprehensive breakout in May. With the U.S.-Iran conflict entering its third month, market expectations for a ceasefire agreement have gradually intensified, which, coupled with the robust profit outlook for the AI industry, has driven tech stocks to lead a broad rebound in U.S. equities.

Adam Turnquist of LPL Financial noted that the easing of geopolitical tensions and a sustained ceasefire framework are significant catalysts for the stock market rally, while strong corporate earnings have also played a key role in maintaining market momentum.

Emily Bowersock Hill of Bowersock Capital Partners further stated that investor enthusiasm for tech stocks is backed by fundamentals, as the market expects the AI infrastructure boom to continue offsetting the negative impacts of geopolitical volatility, provided that corporate earnings maintain growth.

Despite the current strength of the stock market, the sustainability of the rally remains uncertain. Analysts warn that the ceasefire agreement still faces the risk of collapse, while persistently high inflation and a stabilizing labor market could prompt the Federal Reserve to adjust its accommodative stance at the June meeting.

Matt Maley of Miller Tabak admitted that the risk of the ceasefire agreement breaking down remains, "but for now, at least, the probability of the ceasefire being extended is high. The only question now is whether the stock market has already fully priced in this outcome."