Markets have rocketed back to all-time highs…by David Brenchley

 

Our holiday in May took us up from Puglia in the very south of Italy to Emilia-Romagna, the birthplace of such luminary car brands as Ferrari, Lamborghini and Maserati. In fact, we did a day trip to Modena, although with us being more foodies than petrolheads, we went for the balsamic vinegar rather than the Ferrari museum.

When we got back to the UK over the bank holiday weekend, we were treated to the news that Ferrari had unveiled its first ever electric car, alongside a video of none other than Pope Leo behind the wheel.

Despite the widespread ridicule that’s come from most quarters, the Ferrari Luce is sold out through 2027. I’ll let you decide whether that shows the enduring appeal of the Ferrari brand, or that there are still plenty of people who have more money than sense (apologies if you’re one of those people).

Getting back to markets, one could argue that a similar dynamic is playing out today. Despite the fact that the Strait of Hormuz remains very much closed, geopolitical risk is high, interest rate cuts seem to have been put on the backburner and valuations remain elevated, it’s possible we’re either in or getting close to the euphoric stage of the investment cycle.

We will soon witness some of the largest IPOs in history, from unprofitable companies such as SpaceX and Anthropic, while chip stocks are once again surging. The VanEck Semiconductor UCITS ETF (SMGB), for instance, is up c. 85% over six months and c. 175% over 12 months. The VanEck Space Innovators UCITS ETF (JEDG), meanwhile, is up c. 90% and c. 200% respectively over the same timeframes.

Even broad markets are rallying hard, witness the Nasdaq Composite’s c. 30% gain since the end of March as a good example. You tell me if we’re seeing echoes of the dotcom bubble.

 

Top 10 most bought and sold shares in May

 

These were the most (and least) popular shares with UK retail investors on three of the largest investment platforms last month:

 

Tenbagging

 

Considering what we spoke about in the intro, it will come as no surprise that chip stocks were in the ascendency (more on that, and tech more broadly) later.

NVIDIA (NVDA) topped the leaderboard for the first month since November, though many new shareholders will undoubtedly be miffed that despite reporting another record quarter and beating sales and profits expectations, shares fell the following day.

Jensen Huang’s company saw first-quarter revenue soar 85% year-on-year and net income more than triple, yet shares dropped 1.6% as high expectations have become somewhat of a slam dunk for shareholders.

Things have run so far that a 58% share price rise from NVIDIA over the past year looks rather pedestrian when set against some of its chip-making peers, particularly Micron Technology (MU), which became the latest member of the 13-strong $1trn club last week.

In fact, MU’s run has been so eye-catching that it has become a tenbagger (where shares have risen more than ten-fold) in the space of just 10 months. MU has seen strong demand for its dynamic random access memory products, which are used in data centres, AI servers, laptops and mobile devices. Sellside analysts remain bullish, with UBS having recently upgraded its price target for the stock to $1,625, c. 53% higher than today’s price.

 

Going against the grain

 

Interestingly, one chip stock that hasn’t been feeling the love from UK retail investors has been Advanced Micro Devices (AMD), which features in our most-sold list, but not in the most-bought version.

Buoyed by demand for its central processing units, AMD’s shares are up a stunning c. 350% in the past year, suggesting while MU continues to lure in investors, profits are being taken from AMD.

Microsoft (MSFT) also remains seemingly out-of-favour. MSFT was initially caught up in the SaaSpocalypse after Anthropic launched Claude Legal, as investors bet that traditional software stocks would struggle in the new AI era. Meanwhile, MSFT’s heavy capital expenditure on AI infrastructure is also coming into question, as its previous investment thesis, predicated on a capital-light business model, has changed 360 degrees.

Sure, some have taken the contrarian view that the baby has been thrown out with the bathwater, bidding MSFT’s shares up c. 20% since late March, but the stock price remains c. 20% lower than where they were in late October.

Starry-eyed surprise

 

One real UK success story has been Filtronic (FTC), a Durham-based manufacturer of high-frequency amplifier modules that are used by SpaceX for its Starlink satellites. SpaceX owns 15% of FTC, an investment that has been supremely successful since, in the 12 months to 15/05/2026 shares were up c. 600%.

Momentum in the space trade seems to have fizzled out slightly in the past few weeks, however, with FTC’s shares down c. 33%. Still, FTC remains buoyed by enthusiasm for the space economy, which is expected to grow from c. $630bn in value today to as much as $1.8trn by 2035, according to the World Economic Forum, growing at almost twice the rate of global GDP.

Investment trust investors can get access to FTC, alongside a concentrated portfolio of other UK micro-cap stocks, through Rockwood Strategic (RKW), where manager Richard Staveley is of the view that FTC may have further to run, despite having halved his position in the company last year.

Top ten most bought investment trusts in March

 

Moving onto investment trusts, and the top of the list remained broadly unchanged, but we did see some new entries further down the list:

Following the crowd

 

Our list of popular investment trusts arguably shows investors’ laser focus on technology and chips better than anything else could. Indeed, the top four in May were all focused on this one theme.

Scottish Mortgage (SMT) has topped the list for the past 16 months now, and is riding high off the back of its private investments in the likes of SpaceX and Anthropic, both of which are getting ready to float on the stock market later this year.

SMT admitted that SpaceX had been the biggest contributor to returns during its recent full-year results, with Elon Musk’s company now accounting for almost 18% of the portfolio. Anthropic, meanwhile, accounts for another 2.6%.

Outwith SMT, Polar Capital Technology (PCT) and Allianz Technology Trust (ATT), the two tech-focused behemoths of the investment trust universe, also gained in popularity. Both have been on the right side of the SaaSpocalypse, reducing exposure to traditional software names ahead of time, while they are also positioned well to capture the broadening out of the AI trade and are, arguably, reaping the benefits.

We’ll also give a good mention to Seraphim Space (SSIT), too, which is another investment benefiting from the positivity over SpaceX’s IPO (even though SSIT doesn’t invest in the company) and the space economy boom more broadly.

SSIT’s share price has climbed c. 164% over the past 12 months, even including a recent c. 30% fall. All told, SSIT has gone from trading on a discount as wide as 71% three years ago to a c. 30% premium at the time of writing (04/06/2026). Just nine days ago, it was on a 92% premium.

Performance has been boosted by impressive progress made by Finnish microsatellite firm ICEYE, which accounts for almost half of the trust’s investments, alongside the space analytics firm HawkEye 360 (HAWK), which floated on the New York Stock Exchange in early May.

 

Looking east

 

Another region that has been buoyed by the semiconductor euphoria is Asia and, consequently, emerging markets more generally. TSMC, Samsung Electronics and SK Hynix, all three of which also recently joined the $1trn club, have provided chip-related momentum, driving strong performance from the asset class.

In total, the trio accounts for c. one-third of the portfolio of Templeton Emerging Markets (TEM), propelling the trust to deliver c. 90% share price gains over the past 12 months, extending the long-term record of impressive performance from one of the investment trust universe’s stalwarts.

An interesting new entrant to our list is Baillie Gifford Shin Nippon (BGS), which, as all of Baillie Gifford’s funds and trusts do, takes an unashamedly growth style focus to investing in Japanese smaller companies.

This growth slant has hitherto been a headwind in a market that has been powered by value stocks, as Japanese authorities look to encourage companies to realise hidden value in their businesses.

BGS’s five-year returns are little to write home about, but the trust has started to outperform its activist peers in the past few months, no doubt helped by growth mania returning to markets.

The month ahead

 

Amid all the talk of a bubble and euphoria happening in the US, it’s perhaps hard to feel that when we’re sitting across a large body of water in a country that, despite huge gains for global stock markets, allocated a net £877m to bond funds, the strongest inflows since June 2023 and the six best month for the asset class in the 12 years the funds network Calastone has been keeping data.

In the long term, that has the potential to be a good move, but in the short-term it’s likely to hurt. It’s possible that animal spirits could run for a while yet, particularly with the prospect of jumping on yet another seeming Elon Musk gravy train. Let’s hope the FOMO blues don’t kick in.