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Best Stocks for May: CVX & MU Lead Energy & AI Semiconductor Rally
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Key Takeaways
Chevron benefits from firm oil prices, Hess assets and strong cash flow growth drivers.
Micron gains from AI-driven HBM demand, generating multi-billion-dollar quarterly revenues.
Chevron and Micron posted strong earnings beats with robust growth estimates for upcoming quarters.
Global equity markets heading into May 2026 are being driven by gains in a few select sectors rather than broad-based strength. Two sectors stand out with clear, data-backed support: energy and AI-driven semiconductor infrastructure. Both are benefiting from macro conditions, policy influence and earnings visibility.
Here we have picked two stocks, Chevron (CVX - Free Report) and Micron Technology (MU - Free Report) , which are well-positioned to demonstrate strong performance through the month, supported by strong sector tailwinds amid a volatile macroeconomic environment. Let's delve deeper.
Market Setup: January-April 2026
From January through April 2026, the investment landscape has been shaped by elevated inflation, cautious central bank positioning and geopolitical uncertainty, resulting in uneven market performance. In January, broad indices like the S&P 500 and the Dow Jones Industrial Average were range-bound to slightly negative, with defensives and energy holding up better. In February, markets stabilized, supported by resilient economic data. AI-linked tech began outperforming. In March and April, too, broader sectors (financials, traditional IT, consumption) did not fully participate.
Policymakers, including the Federal Reserve, have largely kept financial conditions relatively tight. At the same time, energy markets have remained firm, with the U.S. Energy Information Administration highlighting constrained global supply and below-average inventories, supporting crude prices and energy equities.
This combination of tight liquidity, selective policy support and sector-specific demand drivers has resulted in a market where returns remain concentrated. As May 2026 progresses, the focus shifts to whether earnings momentum in specific areas can continue to offset broader macro constraints.
Top-Performing Sectors Right Now
Theenergy sector remains one of the strongest performers year to date, supported by tight global oil supply and persistent geopolitical risk. The Energy Select Sector SPDR Fund (XLE)hasgained 32.8% year to date, backed by firm crude prices, disciplined supply from major producers and strong cash flow generation across large-cap energy companies. Data from the U.S. Energy Information Administration indicate that global inventories remain below historical averages, reflecting constrained supply. At the same time, large importing nations such as India, which relies on imports for roughly 85% of its crude needs, continue to provide steady demand support.
Image Source: Zacks Investment Research
AI infrastructure-semiconductorshas emerged as another strong performing area of the U.S. market, backed by structural demand and government-supported investment cycles. The CHIPS and Science Act continues to channel capital into domestic capacity, aligning with a surge in private-sector AI spending. Year to date, semiconductor stocks have significantly outperformed broader markets, with the VanEck Semiconductor ETF (SMH) gaining 40.7%. This performance has been driven by accelerating demand from major hyperscalers like Amazon, Microsoft, Alphabet and Meta, which are expected to spend hundreds of billions on AI infrastructure in 2026 collectively.
Image Source: Zacks Investment Research
Our Picks for May
Chevron: It is one of the largest publicly traded oil and gas companies in the world. Chevron is benefiting from stronger oil prices, while its Hess acquisition adds high-quality assets in Guyana, the Bakken and the Gulf of America, supporting production and cash flow growth through the decade. The integrated energy company is also delivering stronger free cash flow despite weaker oil prices, helped by cost cuts, efficiency gains and solid Permian performance. New Gulf projects such as Ballymore and Whale should further lift output in 2026.
In the first quarter of 2026, Chevron reported 53.3% earnings beat year over year. For the second quarter, the Zacks Consensus Estimate for earnings is pegged at $4.40, implying a stupendous 148.6% projected increase over the year-ago reported figure. Based on short-term price targets offered by 25 analysts, the average price target represents an increase of 11.27% from the last closing price of $190.63. The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Micron: It is benefiting from the rapidly expanding AI-driven memory and storage markets. The company is capitalizing on the AI boom with its high bandwidth memory (HBM) solutions, which are increasingly being adopted by major hyperscalers and enterprise customers. On the second-quarter fiscal 2026 earnings call, the company highlighted strong customer interest in its HBM portfolio, which is expected to drive substantial revenue growth in the quarters ahead. Micron’s HBM portfolio is generating multi-billion-dollar quarterly revenues.
In the last-reported second quarter of fiscal 2026, Micron reported a 38.6% earnings beat year over year. For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $19.19, implying a 261.5% projected surge over the year-ago reported figure. The stock also carries a Zacks Rank #1.
Image Source: Zacks Investment Research
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Best Stocks for May: CVX & MU Lead Energy & AI Semiconductor Rally
Key Takeaways
Global equity markets heading into May 2026 are being driven by gains in a few select sectors rather than broad-based strength. Two sectors stand out with clear, data-backed support: energy and AI-driven semiconductor infrastructure. Both are benefiting from macro conditions, policy influence and earnings visibility.
Here we have picked two stocks, Chevron (CVX - Free Report) and Micron Technology (MU - Free Report) , which are well-positioned to demonstrate strong performance through the month, supported by strong sector tailwinds amid a volatile macroeconomic environment. Let's delve deeper.
Market Setup: January-April 2026
From January through April 2026, the investment landscape has been shaped by elevated inflation, cautious central bank positioning and geopolitical uncertainty, resulting in uneven market performance. In January, broad indices like the S&P 500 and the Dow Jones Industrial Average were range-bound to slightly negative, with defensives and energy holding up better. In February, markets stabilized, supported by resilient economic data. AI-linked tech began outperforming. In March and April, too, broader sectors (financials, traditional IT, consumption) did not fully participate.
Policymakers, including the Federal Reserve, have largely kept financial conditions relatively tight. At the same time, energy markets have remained firm, with the U.S. Energy Information Administration highlighting constrained global supply and below-average inventories, supporting crude prices and energy equities.
This combination of tight liquidity, selective policy support and sector-specific demand drivers has resulted in a market where returns remain concentrated. As May 2026 progresses, the focus shifts to whether earnings momentum in specific areas can continue to offset broader macro constraints.
Top-Performing Sectors Right Now
Theenergy sector remains one of the strongest performers year to date, supported by tight global oil supply and persistent geopolitical risk. The Energy Select Sector SPDR Fund (XLE)hasgained 32.8% year to date, backed by firm crude prices, disciplined supply from major producers and strong cash flow generation across large-cap energy companies. Data from the U.S. Energy Information Administration indicate that global inventories remain below historical averages, reflecting constrained supply. At the same time, large importing nations such as India, which relies on imports for roughly 85% of its crude needs, continue to provide steady demand support.
Image Source: Zacks Investment Research
AI infrastructure-semiconductorshas emerged as another strong performing area of the U.S. market, backed by structural demand and government-supported investment cycles. The CHIPS and Science Act continues to channel capital into domestic capacity, aligning with a surge in private-sector AI spending. Year to date, semiconductor stocks have significantly outperformed broader markets, with the VanEck Semiconductor ETF (SMH) gaining 40.7%. This performance has been driven by accelerating demand from major hyperscalers like Amazon, Microsoft, Alphabet and Meta, which are expected to spend hundreds of billions on AI infrastructure in 2026 collectively.
Image Source: Zacks Investment Research
Our Picks for May
Chevron: It is one of the largest publicly traded oil and gas companies in the world. Chevron is benefiting from stronger oil prices, while its Hess acquisition adds high-quality assets in Guyana, the Bakken and the Gulf of America, supporting production and cash flow growth through the decade. The integrated energy company is also delivering stronger free cash flow despite weaker oil prices, helped by cost cuts, efficiency gains and solid Permian performance. New Gulf projects such as Ballymore and Whale should further lift output in 2026.
In the first quarter of 2026, Chevron reported 53.3% earnings beat year over year. For the second quarter, the Zacks Consensus Estimate for earnings is pegged at $4.40, implying a stupendous 148.6% projected increase over the year-ago reported figure. Based on short-term price targets offered by 25 analysts, the average price target represents an increase of 11.27% from the last closing price of $190.63. The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Micron: It is benefiting from the rapidly expanding AI-driven memory and storage markets. The company is capitalizing on the AI boom with its high bandwidth memory (HBM) solutions, which are increasingly being adopted by major hyperscalers and enterprise customers. On the second-quarter fiscal 2026 earnings call, the company highlighted strong customer interest in its HBM portfolio, which is expected to drive substantial revenue growth in the quarters ahead. Micron’s HBM portfolio is generating multi-billion-dollar quarterly revenues.
In the last-reported second quarter of fiscal 2026, Micron reported a 38.6% earnings beat year over year. For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $19.19, implying a 261.5% projected surge over the year-ago reported figure. The stock also carries a Zacks Rank #1.
Image Source: Zacks Investment Research