U.S. large-cap stocks, as proxied by the S&P 500 Index, rose 5.3% in May, while U.S. small-cap stocks gained 4.4% over the month. U.S. intermediate-term bonds ended the month up 0.3%.
The Strait of Hormuz remains the world’s most important economic bottleneck, as the U.S.-Iran conflict continues to pressure energy markets and keep fuel inventories tight.
AI has become the market’s new bottleneck, and memory and power shortages are becoming the primary constraints on AI infrastructure growth.
The AI investment cycle is accelerating with hyperscalers projected to spend nearly $750billion on capital expenditures in 2026 to expand compute capacity.
Helped by the capex boom, S&P 500 earnings growth expectations have increased dramatically across all sectors, and profit margins are expected to stay near historic highs.
May 2026 Commentary: Bottlenecks
Summary
Read and download the commentary here.
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