The best performing stocks in May

Energy and technology stocks led the way.

May proved to be a bounce back month for stocks, as the Nasdaq and S&P 500 had their best month since November 2023.

The Nasdaq returned 9.6% in May, while the S&P 500 jumped 6.1% and the Dow Jones Industrial Average rose 3.9% last month.

The information technology sector led the way, returning 11.3% for the month, while industrials were up 9.5% and communication services jumped 9.3%. Also, consumer discretionary stocks rose 8.2%. Only two sectors were negative for May: healthcare, down 4.8%, and energy, down 2.3%. Yet, two of the top stocks on the S&P 500 in May were energy stocks.

Of the top three stocks on the S&P 500 for May, two of them were energy stocks.

The top performer was NRG Energy (NYSE: NRG), which posted a stellar return of 42.3% in May. The primary catalyst for NRG was its acquisition of the natural gas portfolio and virtual power plant from LS Power. The purchase doubles NRG’s energy generation and adds 18 natural gas facilities to its portfolio. NRG stock is up 75% YTD and has a median price target of $173 per share, which suggests 10% growth.

The second-best stock on the S&P 500 was Constellation Energy (NYSE: CEG), which spiked some 37% in May. The Baltimore-based gas and electric company got a jolt from a solid Q1 earnings report and outlook. But it really got a lift from an executive order by the Trump administration calling for the acceleration of nuclear energy. Constellation is the leading provider of nuclear energy in the U.S. Constellation stock is up 28% YTD and has a median price target of $320 per share, which represents 3% upside.

The third top stock on the large cap index was Seagate Technology (NASDAQ: STX). Seagate, a data storage company, saw its stock surge following an investor event on May 22 where it outlined a three-year outlook that called for a compound annual growth rate of low-to-mid-teens through 2028. It also projected a 40% gross margin with expansion opportunities. Seagate stock is up 38% YTD and has a median price target of $128 per share, suggesting 7% additional upside.

AppLovin and the trade desk lead Nasdaq

The top two stocks on the Nasdaq Composite in May were AppLovin (NASDAQ: APP) and The Trade Desk (NASDAQ: TTD).

AppLovin is a technology firm that has developed AI-based software that enables companies to market and monetize their apps. The stock soared 45.9% in May, driven mainly by the sale of its mobile gaming apps business for $400 million. However, it kept a 20% ownership stake. The sale will improve its balance sheet and allow AppLovin to focus on its fast-growing advertising business. AppLovin stock is up 16% YTD and has a median price target of $461 per share, which would represent a 17% return.

The Trade Desk is also a technology company that specializes in helping companies target their digital advertising. The company saw its stock skyrocket 40.3% in May, fueled by a huge earnings beat in its fiscal first quarter and increased guidance for the fiscal year. The Trade Desk also launched its OpenSincera app, which provides metrics for users on their advertising, and stems from its acquisition of Sincera earlier this year. The Trade Desk stock is down 36% YTD but has a median price target of $84 per share, suggesting a 12% return.

Constellation Energy was the third best stock on the Nasdaq.

Disney and NVIDIA lead the Dow

Finally, Walt Disney (NYSE: DIS) was the top performer on the Dow Jones Industrial Average. Disney stock returned 24.3% in May and is now up about 1% YTD. Disney stock has a median price target of $125 per share, which represents an 11% return over the next 12 months.

NVIDIA (NASDAQ: NVDA) was the second-best performer on the Dow last month, returning about 24.1%. NVIDIA stock is down just 0.6% YTD, but analysts expect a 27% return over the next year, as it has a median price target of $175 per share.

The third best performer on the Dow in May was Microsoft (NASDAQ: MSFT), which saw its stock rise 16.5% last month. Microsoft stock is up 10% YTD and has a median price target of $505 per share, which would represent an additional 10% return.