The Nasdaq 100 index has emerged as the top-performing global technology benchmark in May, achieving an impressive 8.8% gain and outpacing Europe’s STOXX Europe 600 Technology index, which rose only 7.8%.

This remarkable recovery occurred after several months of relative underperformance, largely driven by a combination of easing trade tensions and new economic agreements between the U.S. and Middle Eastern nations.

The Magnificent 7 in the Limelight

According to Deutsche Bank, the “Magnificent 7” surged by +13.4%, marking their best month since May 2023. This group includes key players like Nvidia, Apple, Microsoft, Meta, Amazon, Tesla, and Alphabet—all reaping the benefits of sector rotation and heightened investor enthusiasm for AI infrastructure.

This rally marked a departure from previous underperformance patterns while also revealing a growing concentration risk, as investments cluster around this narrow group of technology giants.

Stock Highlights

• Nvidia (NASDAQ: NVDA) led the way with a 24.1% gain in May, credited to a notable AI partnership with Saudi Arabia and strong Q1 earnings that exceeded expectations.

• Google (NASDAQ: GOOGL) also posted an increase of over 8%, buoyed by strong earnings, especially with its AI initiatives.

• Tesla (NASDAQ: TSLA) displayed a modest monthly gain of only 0.4%, but has surged about 46% since April, backed by Elon Musk’s renewed emphasis and plans for AI-powered robotaxis expected to debut in June.

Optimism amidst Caution

Despite the solid performance in May, Deutsche Bank warns that the outperformance may be temporary. Reports indicate:

• Tariffs continue to impose greater burdens on U.S. companies compared to European counterparts.

• The U.S.-China détente initiated on May 12 prompted a rebound, but policy risks remain a concern.

• A U.S. court briefly blocked new tariffs, only for another ruling to reinstate the restrictions.

• Export restrictions on semiconductors remain in place, adding uncertainty for tech producers.

Sector-Wide Positive Returns

May saw positive returns across all tech sub-industries:

• Hardware led with an 11% overall gain.

• IT services, while having the weakest year-to-date results, managed to rebound this month.

Investors can track sector performance effectively using tools like the Sector P/E Ratio API and the Historical S&P 500 Constituents API for insights on ongoing sector trends and membership changes.