The S&P 500 Momentum Index, which bets on recent winners, surged 31.7% over two months-its largest gain since inception in 1994. The rally ending May 2026 was fueled almost entirely by AI and semiconductor stocks.
Technology stocks generated roughly 85% of S&P 500 gains in May, while non-tech sectors contributed only 3%.
The S&P 500 closed around 7,580. The Nasdaq posted its best two-month performance in decades. Momentum ETFs like Invesco S&P 500 Momentum ETF are heavily tilted toward tech, amplifying AI gains.
Goldman Sachs reports its momentum factor jumped 25% over three months, with hedge fund exposure to momentum trades near five-year highs. Historically, extreme momentum near market peaks can signal caution.
Notably, this equity surge saw little spillover into crypto. The rally is driven by a specific thesis: AI infrastructure and hardware supply chains are generating real revenue growth.
The concentration risk is systemic. If AI sector earnings falter, a broader correction could follow.