5/24 Sector-by-Week Analysis - 'Two-Way Rally' of AI Semiconductors and Energy
May 24, 2026 Weekly Market Analysis
## This Week's Key Theme: 'Two-Way Rally' of AI Semiconductors and Energy
This week (May 18-24, US Eastern time), the US stock market was led by technology and energy stocks as demand for AI infrastructure and high oil price expectations came into the spotlight simultaneously. Based on 10 trading days, 7 out of 11 sectors recorded positive returns, with energy (+6.06%) and technology (+4.03%) leading, and materials (-2.81%) at the bottom.
- Explosive rally in AI-related tech stocks: Arm Holdings (ARM), Palo Alto Networks (PANW), CrowdStrike (CRWD), Cisco (CSCO), and others showed strong performance, pushing up the technology sector. ARM showed a surge close to 40-50% on a weekly basis, reflecting expectations that AI chip architecture will become the standard. (foreignpolicyjournal.com)
- Cybersecurity 'Second Wave of AI Benefits': Alongside expectations that security demand will increase with AI adoption, analyst target price raises (such as Rosenblatt raising CRWD and PANW targets on May 18) stimulated investment sentiment. (rblt.com)
- Energy stocks sustained by high oil prices and geopolitical risks: With supply risks centered in the Middle East and firm demand expectations maintained, Occidental (OXY), Targa Resources (TRGP), ONEOK (OKE), and others rose together. This week confirmed the strong 120-day cumulative +33% trend in the energy sector that has continued for the past few months.
In contrast, some cyclical and defensive stocks showed signs of taking a breather. Materials, communication, and industrial stocks weakened, while consumer cyclicals and defensive stocks rose slightly or fluctuated around breakeven, confirming that the existing structure of "localized strength centered on AI and energy" has not changed significantly.
## Sector Performance: Short-Term (10D) and Medium-to-Long-Term (30D·120D) Trends
### 1) Energy: 1st Place in 10D, Long-Term Strength Reconfirmed in 120D
- 10D: +6.06% (1st out of 11)
- 30D: +4.78%
- 120D: +33.66% (top tier alongside technology)
- Representative stocks: TRGP +11.54%, OXY +10.90%, OKE +10.42%
The energy sector is continuing structural strength by recording positive returns across short-term, medium-term, and long-term periods. As oil and gas prices maintain high levels, domestic production and transportation infrastructure companies (Targa, ONEOK, etc.) are being reassessed under the recognition that "pipelines are essentially toll business."
Looking at sector trend analysis, the energy portfolio underwent a major adjustment (-12% range) since late February and then reversed to an upward trend, maintaining a +3.71% upward trend from May 6 to present. This suggests that the recent 10-day rally is not a short-term rebound but an extension of the re-rise phase that has continued since March.
Investor Perspective:
- Energy has already risen more than +30% over the past 120 days, so this could be viewed as an 'expensive' zone.
- However, considering dividend yields and stable cash flows of infrastructure companies, a strategy of maintaining a certain weight as a hedge against inflation and geopolitical risks in the portfolio still appears valid.
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### 2) Technology: 'Concentrated Rally' Centered on AI and Security Stocks
- 10D: +4.03%
- 30D: +25.72% (top tier across all sectors)
- 120D: +33.03%
- Representative stocks: ARM +43.61%, PANW +25.35%, CRWD +24.94%, CSCO +24.69%, SWKS +23.42%
The technology sector is continuing steep gains of more than +25% based on 30 days, as "the entire AI infrastructure chain" undergoes reassessment.
- ARM: Its dominant position in AI chip design is being highlighted, and the narrative of "standard architecture for the AI era" is being strengthened. Following April, AI-related expectations continued to accumulate in May, leading to a rally approaching nearly 50% this week. (foreignpolicyjournal.com)
- Cybersecurity Trio (PANW, CRWD, CSCO): As AI proliferation makes both attacks and defenses more sophisticated, reports reassessing the value of cloud-based security platforms and target price increases have followed. On May 18, Rosenblatt raised targets for CrowdStrike and Palo Alto, emphasizing platform competitiveness in the AI environment. (rblt.com)
Looking at sector trend data, the technology portfolio underwent adjustment until mid-March, then saw steep gains of approximately +29% from March 27 to May 11, and after a brief breathing period, entered a new +6% range gain phase starting May 19. This suggests a "second wave AI momentum rally" is underway.
Investor Perspective:
- AI-related tech stocks have already seen valuations (price-to-earnings) rise substantially.
- However, many analysts believe that stocks focused on "infrastructure to run AI" such as data centers, cloud, and security maintain valid medium-to-long-term structural growth stories, despite high short-term volatility.
- For individual investors, a combination of "AI-themed ETF with balanced exposure + some individual growth stocks in small amounts" may be a realistic choice from a risk management perspective.
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### 3) Utilities, Healthcare, Finance: 'Quiet Gains' from Defensive and Essential Sectors
- Utilities (10D +2.43%, 30D -3.20%, 120D +3.50%)
- This was a week when, amid signs of diminishing interest rate burdens, utility companies with dividend appeal such as electricity and gas saw bargain buying.
- Sector trends showed a decline (-4.9%) through April-mid-May, then shifted to a rebound zone of +2% range from May 19.
- Healthcare (10D +1.66%, 120D -4.37%)
- Individual stock positive catalysts such as DXCM (+18.96%), LLY (+12.48%), HUM (+12.00%) drove sector returns.
- While the overall sector declined approximately -4% over the past 120 days, showing relative underperformance, it has shown a gradual recovery trend (+2.6%) since late April, being re-discussed as a defensive choice for economic slowdown and aging population themes.
- Finance (10D +0.90%, 30D +3.86%, 120D +1.14%)
- Large insurers (MET +8.48%) and investment banks (GS +6.43%) led sector returns.
- Despite continued uncertainty about the interest rate path, the market appears to place greater weight on "the possibility of extreme further tightening is low" and gradually reassess financial stocks overall.
Investor Perspective:
- These sectors have been relatively sidelined this year compared to high-beta (high volatility) sectors like AI and energy, but serve to reduce portfolio volatility.
- In particular, healthcare and utilities have relatively stable demand regardless of economic conditions, making them worth considering as "defensive cushioning to add to growth-focused portfolios."
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### 4) Consumer, Industrial, Communication, Materials: Breathing Room and Differentiation
- Consumer Cyclical (10D -0.77%, 120D -4.00%)
- While the overall sector was weak, individual positive catalyst stocks such as Ford (+22.68%), eBay (+7.48%), Deckers (+6.22%) exist.
- Automobiles and e-commerce are sensitive to economic cycles and interest rates, with performance potentially diverging significantly based on future consumption indicators and interest rate paths.
- Industrials (10D -1.09%, 120D +9.48%)
- Long-term (120D) shows positive returns, but recent 10 days underwent adjustment.
- Individual stocks like HON (+7.53%), MMM (+6.94%), ODFL (+6.12%) remained firm, but overall sector is weighed down by concerns about economic leading indicators slowing.
- Communication Services (10D -1.21%, 30D +2.57%, 120D -2.05%)
- While some stocks like TTWO (+3.22%), APP (+2.70%), TKO (+2.52%) were positive, the overall sector was weak.
- While showing slight gains over the past month, remaining in negative territory over 120 days with continued adjustment of expectations regarding the growth rate of digital consumption in big tech advertising, streaming, and gaming.
- Basic Materials (10D -2.81%, 30D -2.38%, 120D +18.84%)
- On a 120-day basis still showing high returns of +18.8%, but both recent 10 and 30 days are negative.
- Some stocks like CF (+6.24%), LIN (+4.95%), MOS (+2.46%) held their ground, but overall sector is burdened by economic slowdown and Chinese demand uncertainty.
- Based on sector trends, entering a downside -4% range adjustment phase from May 12, confirming a short-term correction phase.
Investor Perspective:
- These sectors blend "economic sensitivity + value (undervaluation) appeal," potentially becoming beneficiary sectors in a late rally if interest rate declines and economic soft landing become visible simultaneously.
- However, given continued uncertainty about economic and policy direction at this point, a split approach and long-term diversification is a more realistic strategy than short-term all-in.
## Major Stock Movements: This Week's 'Stars'
### 1) Arm Holdings (ARM): Symbolic Stock of AI Chip Design
This week, ARM surged approximately 40-50%, dominating the sentiment of the technology sector. With expanded use of ARM-based chips in AI servers, smartphones, IoT, and more, plus news of developing its own AI CPUs, the perception of "essential foundation for the AI era" has strengthened. (foreignpolicyjournal.com)
Key Points:
- ARM's business is based more on design and licensing rather than mass chip production.
- As long as AI server and data center investments continue to expand, ARM's royalty revenue base could expand structurally.
- However, it's important to note that sharp surges in short periods like this week have often been followed by price corrections (pullbacks).
### 2) Cybersecurity Stocks: PANW, CRWD, CSCO
Palo Alto Networks, CrowdStrike, and Cisco attracted attention with 20% mid-to-high gains this week. Investors are recalling the simple but powerful logic that "the more difficult AI makes security, the higher the value of security companies."
- Rosenblatt raised targets for PANW and CRWD on May 18, evaluating them as security companies optimized for the AI era through cloud-based platforms. (rblt.com)
- Announcements of AI-based security solutions unveiled at conferences like RSA became material highlighting these companies' positions in an "AI vs AI warfare" landscape. (reddit.com)
Investor Perspective:
- Cybersecurity stocks have high revenue growth rates and long-term demand growth stories from expanded AI adoption.
- However, stock prices already reflect a substantial portion of these expectations, and they are typical growth stocks that could see higher volatility if revenue growth rates slow.
### 3) Energy Infrastructure Trio: TRGP, OXY, OKE
- Targa Resources (TRGP) and ONEOK (OKE) are companies handling natural gas and liquefied gas transportation and processing infrastructure in the US, playing the role of "pathways connecting producers and consumers." In recent months amid energy price volatility and geopolitical risks, these infrastructure companies are receiving renewed attention for relatively stable cash flows and dividends. (tallacoptions.com)
- Occidental (OXY) continues to attract interest through strong crude prices and expansion of major investor stakes (such as Berkshire Hathaway's holdings), showing correlated strength as the entire energy sector gains attention this year due to Middle East tensions. (en.wikipedia.org)
Investor Perspective:
- Energy infrastructure is essential infrastructure that doesn't disappear completely even if energy consumption drops during recessions, offering lower volatility compared to pure exploration and production (E&P) companies.
- Investors prioritizing dividends and cash flows can adjust risk by increasing infrastructure and pipeline weightings within the energy sector.
## Points to Watch Next Week
1. Determining 'Overheating vs Momentum' in the AI and Semiconductor Rally
- Given the significant gains in AI-related stocks like ARM, PANW, CRWD in a short period, profit-taking selling pressure could emerge.
- Next week, major big tech and semiconductor companies' additional guidance and conference presentations, plus CAPEX (capital expenditure) plans from AI investment-related companies, are likely to draw market attention again.
2. Energy Prices and Geopolitical Risks
- Whether the energy strength (120D +33.66%) that has continued for the past several months will be maintained or whether adjustments will occur based on supply expansion and diplomatic progress news needs monitoring.
- Individual investors should examine not only oil and gas prices but also energy companies' dividend policies and debt structures.
3. Whether Cyclical Sectors Will Rebound
- Materials, industrials, and consumer cyclicals have underperformed in recent 10 days, but some remain in positive territory over 120 days.
- If economic indicators (employment, consumption, PMI) and central bank comments change market perspectives on "is this real recession or soft landing," sector rotation could accelerate.
4. Portfolio Review Points
- This is a good time to check whether portfolios are excessively concentrated in one or two sectors amid the market rally focused on AI and energy.
- This week's trend suggests that an "AI infrastructure + energy + defensive stocks (healthcare/utilities)" combination can be useful for building relatively balanced portfolios.
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In summary, this week's US stock market can be viewed as "simultaneous surge of AI and energy with selective breathing room in other sectors." AI-related tech stocks and energy infrastructure companies continue showing strong momentum, but they have already risen substantially. Going forward, the biggest investor concern will be whether the current localized strength spreads to broader sectors or enters a correction phase, depending on interest rate, economic, and policy variables.
This content is provided for informational purposes only and does not recommend investment in any specific stocks or assets.
Source: https://nextinvest.org/ko
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