QQQ outperformed the S&P 500 for the third consecutive month in May, gaining 10.56% on an NAV total return basis versus the S&P 500’s 5.26%. Strong equity market performance in May appeared to be supported by improving investor sentiment amid indications of potential de-escalation in the U.S.–Iran conflict, renewed AI optimism, and generally strong corporate earnings reports that demonstrated signs of market resilience amidst elevated energy prices. As of the end of May, the S&P 500 had posted nine consecutive weeks of positive returns, tied for the second longest streak of consecutive weekly gains for the index since 1985.
Strength in equity markets was generally widespread with major equity market indices posting positive returns across the market cap spectrum. Large caps led small-cap and mid-cap while growth outpaced value. Large-Cap growth represented by the Nasdaq 100 Index, saw the strongest returns, rising 10.58% in May. The Russell 2000 Index,3 representing small caps, rose 4.37%, followed by the S&P Midcap 400 which rose 2.45%. The Russell 1000 Growth Index gained 7.20% outperforming the Russell 1000 Value Index, which rose 2.95%.
Volatility was relatively muted in May, despite a backdrop of geopolitical tension and uncertainty. The VIX index,4 a measure of equity market volatility, closed the month at 15.32, marking a 9.30% decrease from a month earlier. May 2026 saw a mid-month volatility flare — with the VIX briefly touching 21.56 — followed by a sustained compression back toward the mid-15s by month-end. The overall trajectory appeared to be one of declining realized fear, with the equity market absorbing macro headwinds like the Iran conflict and interest rate uncertainty and closing the month in a lower-volatility regime. The ongoing US-Iran conflict and its impact on energy prices and resulting inflationary pressures continued to be a primary driver of volatility throughout the month.
The US-Iran conflict continued to be closely watched by investors as May was defined by a delicate ceasefire, sustained tension surrounding the Strait of Hormuz and start-stop diplomacy, with the two sides ultimately unable to agree on terms towards a resolution. In early May, the ceasefire efforts remained under strain as Iran rejected the US resolution proposal. On May 12th President Trump communicated his dismay with Iranian counter proposals remarking the ceasefire was on “life support”, sending oil prices higher and halting shipping traffic in the Strait of Hormuz. The Nasdaq 100 fell -0.86% on May 12th following intensifying negotiations.
Negotiations throughout the month continued to send mixed signals. On May 23rd President Trump announced the deal was near finalization with terms largely negotiated. However, on May 26th progress stalled in discussions over Iranian nuclear program with President Trump remarking that he was not satisfied with the negotiations. Days later on May 28th, the US and Iranian negotiators reportedly reached a tentative agreement to extend the ceasefire for 60 days and launch nuclear negotiations, however the deal remained elusive through the end of the month. On May 31st, President Trump stated the proposed deal “states very clearly that Iran will not have a nuclear weapon”, however negotiations remained unresolved with key sticking points including sanctions relief, frozen Iranian assets and Iran’s nuclear enrichment program.
Macroeconomic data prints5 were generally mixed in May, but the market remained resilient marching higher throughout the month driven mainly by strong earnings. Tensions in the Middle East continued to disrupt the Strait of Hormuz keeping oil prices above $100/bbl for the majority of May. This drove a broad-based inflationary shock across energy, freight, and supply chains globally. The Consumer Price Index (CPI)6 rose 0.6% month-over-month, down from last month print of 0.9% which was its largest monthly increase in two years. However, Core CPI, which excludes food and energy, rose only 0.4%, slightly above expectations of 0.03%. The ISM Manufacturing Prices Paid Index,7 measures of input costs for manufacturing businesses, increased to its highest level since April of 2022, due primarily to elevated energy costs from the closure of the Strait of Hormuz. Labor markets remained resilient as US nonfarm payrolls rose 115k in April, well above estimates of 65k, marking the first consecutive monthly gains in almost a year. Despite positive releases for the labor market, the University of Michigan Consumer Sentiment Index8 fell to a record low of 44.8 in May, as consumers were pressured by rising gas prices.
Developments in the artificial intelligence (AI) ecosystem remained a significant tailwind for equity performance in May. Most major earnings reports have shown continued strength and major AI related deals helped sustain momentum for AI related names for another month.
Three of the ten sectors represented in QQQ finished May in positive territory. Technology was the best performing sector, returning 14.89%, followed by Telecommunications and Industrials, which returned 12.96% and 3.39%, respectively. Energy was the worst performing sector, returning -7.27%, followed by Utilities and Real Estate, which returned -5.25% and -4.38%, respectively.
QQQ’s relative outperformance versus the S&P 500 was primarily driven by its differentiated holdings in and average overweight to the Technology sector. QQQ’s Technology holdings average weight was 65.40% and returned 14.89% in May, while the S&P 500’s Technology holdings average weight was 44.12% and returned 11.41%. QQQ had an average overweight of 21.28% to the Technology sector in the month.
QQQ’s differentiated holdings and overweight in the Consumer Discretionary sector were the greatest detractor to the fund’s relative performance. QQQ’s Consumer Discretionary holdings average weight was 18.73% and returned -1.38% in May, while the S&P 500’s Consumer Discretionary holdings average weight was 13.24% and returned 0.33%. QQQ had an average overweight of 5.49% to the Consumer Discretionary sector in the month.
On May 20th, Nvidia reported first-quarter revenue of $81.62 billion, up 85% year-over-year and ahead of the $79.19 billion consensus estimate, with data center revenue of $75.2 billion surging 92% year-over-year. Adjusted gross margin9 came in at 75%, and the company guided second-quarter revenue to a range of $89.18–$92.82 billion, comfortably above the $87.36 billion analyst estimate. Nvidia aims to rely less on giant data center operators and predicts other businesses and governments will become a bigger source of revenue for its chips and computing products to support artificial intelligence ambitions The company faces growing competition from chipmakers trying to carve out a piece of the AI computing business and major buyers of Nvidia's technology are developing their own in-house components The results reinforced Nvidia's dominant position in AI infrastructure and supported investor confidence in the durability of data center spending.
Cisco Systems gained as much as 22% in premarket trading on May 14 after delivering a fiscal fourth-quarter revenue outlook of $16.7–$16.9 billion, well above the $15.8 billion analyst consensus. Alongside the guidance beat, Cisco announced plans to cut thousands of jobs as part of a strategic restructuring aimed at sharpening its focus on the fast-growing AI networking market. The dual announcement — strong top-line guidance paired with a cost-reduction initiative — was interpreted by the market as a meaningful pivot toward higher-growth, AI-centric revenue streams.
Alphabet shares outperformed the broader Magnificent Seven10 cohort in premarket trading on May 6 after the Information reported that AI startup Anthropic plans to spend approximately $200 billion with Google over five years. The reported commitment, if confirmed, would represent one of the largest cloud and AI services agreements on record and would significantly bolster Google Cloud's revenue visibility. Alphabet rose approximately 1.8% in premarket trading that day, while most other Mag 7 names were flat to slightly lower.
Micron Technology shares surged approximately 29% during the week of May 5, marking the chipmaker's best weekly performance since December 2008. The rally was mainly driven by renewed enthusiasm around AI-related memory demand, with HBM (high-bandwidth memory) increasingly viewed as a critical bottleneck in AI infrastructure buildouts. Despite the sharp move, analysts noted that Micron's valuation remained relatively modest compared to other Nasdaq-100 semiconductor peers, with some characterizing the stock as still attractively priced given its earnings trajectory.
Lumentum Holdings joined the Nasdaq-100 Index before the opening bell on May 18, replacing CoStar Group. The inclusion followed a remarkable run for the optical technology company, whose shares ranked among the top five performers in the S&P 500 year-to-date, with a market capitalization of approximately $70 billion as of mid-May. The index addition was viewed as a significant milestone for Lumentum, reflecting the market's recognition of its growing role in AI-driven optical networking and data center interconnect infrastructure. Shares surged following the announcement on May 11.
Source: Bloomberg, L.P., and Nasdaq as of 5/31/2026.
Standardized performance - Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.
For the month of May, shares traded of QQQ decreased by 9.94% and notional value traded increased by 1.60% month-over-month. The month saw an average of 39.37 million shares traded each day (vs. 43.72 million last month) for an average daily value of $27.89 billion (vs. $27.46 billion last month). That compares to averages of 65.02 million shares and $7.59 billion over the life of the fund, and 53.16 million shares and $32.03 billion for the past 12 months.
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All data is from Bloomberg, L.P. as of 5/31/2026, unless otherwise noted.
Past performance is not a guarantee of future results.
An investor cannot invest directly in an index. Index returns do not represent Fund returns.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional/financial consultant before making any investment decisions.
The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.
Growth stocks tend to be more sensitive to changes in their earnings and can be more volatile.
The Index and Fund use the Industry Classification Benchmark (“ICB”) classification system which is composed of 11 economic industries: basic materials, consumer discretionary, consumer staples, energy, financials, health care, industrials, real estate, technology, telecommunications and utilities.