May's rally looks healthier than many expected, but it is still heavily driven by AI and large-cap tech. Market breadth has improved compared to early 2025, yet leadership remains concentrated in names linked to AI infrastructure, semiconductors and hyperscaler capex.
A few things I am watching for June:
Bullish factors
Strong AI spending from cloud giants.
Falling recession fears.
Earnings revisions for AI beneficiaries such as NVIDIA, Micron Technology and Broadcom remain positive.
Institutional cash levels are not excessively low yet.
Risks
Nasdaq 100 above 30,000 is psychologically significant.
Valuations are becoming stretched.
Any disappointment in AI capex growth could trigger a sharp rotation.
Bond yields remain a threat to high-multiple stocks.
For June, I favour:
1. AI infrastructure (still strongest trend)
NVIDIA
Micron
Broadcom
Optical networking and power infrastructure plays
2. Selective software
Beneficiaries of actual AI monetisation rather than AI narratives.
3. Quality diversified exposure
For long-term investors, broad ETFs such as VWRA and CSPX remain sensible rather than chasing individual winners.
My base case is continued upside with higher volatility, not a major top. I would assign roughly:
60% chance: further grind higher
25% chance: 5-10% correction
15% chance: major risk-off event
So for June, I am still constructive, but I would be buying dips rather than chasing breakouts after an 8% Nasdaq month. Given your current VWRA/CSPX accumulation plan and your preference to keep cash available for larger pullbacks, I would stick to the DCA schedule rather than deploy all spare cash at current levels.
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