What are the most worthwhile stocks to buy right now? AI computing power, semiconductors, and leading consumer companies are currently attracting funding attention.

The global stock markets in 2026 exhibit a fascinating pattern of divergence. As of the end of May 2026, the S&P 500 index remains above 7,500 points, and the Nasdaq index surpasses 26,600 points, with both indices hitting record highs in May. However, beneath these shiny performances, the market's structural composition is undergoing profound changes: profits of a few core tech companies are attracting the majority of capital attention, while most industry stocks face multiple challenges related to valuations, earnings expectations, and macroeconomic environments.

In the macro environment, uncertainty around the Federal Reserve's policy path is increasing. Pliush Chief US Economist predicts a 45% chance that the federal funds rate will remain unchanged over the next 12 months, and a 35% chance of rate hikes again before the end of the year or early 2027. Rising inflation risks and geopolitical tensions intertwine, creating more complex constraints on risk asset pricing. Meanwhile, China's economic growth shows a structural divergence: production outpaces consumption, while the US economy demonstrates unexpected resilience supported by AI capital expenditure. However, part of this resilience stems from pre-stocking amid supply chain disruptions, and its sustainability remains to be seen.

The key question—"Which stocks are most worth watching now?"—does not point to a specific stock code but rather to: Where is the market's main logic? Which industries have verifiable fundamentals? How to allocate across different asset classes to manage uncertainty?

What stage is the current macro cycle in?

Understanding stock allocation logic begins with positioning within the macro cycle. In the first half of 2026, the macro economy shows clear features of "strong data, weak expectations." According to Dongfang Securities, US economic resilience has a prominent "front-loaded" characteristic—companies are pre-stocking and pre-producing due to concerns over supply chain risks, leading to robust manufacturing data, but actual demand and endogenous growth indicators are only modestly growing. This suggests that once supply-side disruptions ease temporarily, a pulling-forward effect may emerge.

On inflation and interest rates, rising energy prices push up import costs and CPI, with market expectations for Fed easing continually pushed back. In Q1 2026, US economic growth is about 2%, with 115k new jobs added in April, and both manufacturing and services PMI remain in expansion territory. These solid data make it difficult for the Fed to cut rates quickly, shifting the market's core contradiction from "rate cuts are positive" to "high rates suppress valuations."

For stock investors, the direct implication is: a valuation-expansion rally is unlikely to continue, and the market's upside will increasingly depend on actual earnings growth. Therefore, in the current stock selection framework, earnings visibility, cash flow quality, and the match between valuation and growth should be more important screening criteria than before.

AI computing power demand is spreading from GPUs across the entire industry chain

The most prominent market theme in 2026 remains artificial intelligence. UBS maintains a bullish outlook on the tech and internet sectors, expecting AI to continue being a key catalyst. Similarly, Western Securities' research report highlights the dual narrative of "technology-driven" and "security-driven" themes. But from an investment logic perspective, the diffusion trend of AI themes warrants special attention.

In 2026, AI computing power demand is no longer focused solely on GPUs. Galaxy Securities notes that NVIDIA's FY2027 Q1 data center revenue grew 199% year-over-year, indicating that AI data center construction has expanded from single-chip demand to network, connectivity, and storage infrastructure across the entire supply chain. These supporting vendors—such as network equipment manufacturers, memory chip producers, and server suppliers—are also gaining growth certainty during infrastructure expansion cycles. For example, Cisco received $5.3 billion in AI infrastructure orders from hyperscale cloud providers in Q3 2026, and its full-year AI hyperscale customer order forecast was raised sharply to $9 billion, with the stock soaring over 20% after earnings release.

From a allocation perspective, the diffusion of AI infrastructure chains means that beneficiaries within the tech sector are not limited to a few leading computing companies; network devices, optical modules, storage, and servers are all experiencing supply-demand improvements and order growth validation. However, market divergence is increasing: as AI narratives shift from concept validation to actual performance, investors are focusing less on "who invests most in AI" and more on "who can sustain profitability in AI."

What structural opportunities does the semiconductor industry face?

The semiconductor industry has been one of the best-performing sectors in the 2026 global stock market. According to Dow Jones data, the Philadelphia Semiconductor Index has risen about 82% in the first 100 trading days of 2026, setting a record for the best performance in that period, with constituent stocks adding approximately $5.7 trillion in market value. Intel's gains this year exceeded 200%. After such a significant rally, whether the industry’s investment logic still holds depends on actual earnings realization rather than market sentiment alone.

From the memory chip perspective, UBS notes that for the first time, the memory industry has entered into long-term agreements with fixed pricing components, which could smooth profit fluctuations and weaken cyclicality, shifting valuation from "cyclical stocks" to "growth stocks." Micron's market cap surpassed $1 trillion, and SK Hynix announced "iHBM" technology to meet the strict cooling requirements of high-performance computing. In equipment and materials, global silicon wafer shipments grew 13% YoY in Q1 2026, with leading firms Shin-Etsu, SUMCO, and GlobalWafers raising prices twice this year, with cumulative increases over 15%, and further upside expected in H2. On the domestic substitution front, Changxin Technology's IPO was approved by the Shanghai Stock Exchange, marking the entry of a domestic DRAM leader into the capital markets and reinforcing the investment theme of "domestic storage expansion—benefiting equipment and materials."

The main market debate on semiconductors concerns valuation. The Philadelphia Semiconductor Index's forward P/E is about 26x, above the 10-year average of 21x, but earnings growth is already digesting some valuation pressure. Meanwhile, T. Rowe Price suggests the market may still underestimate the Fed's potential further tightening. If interest rates change unexpectedly, sectors supported by high growth narratives may be more sensitive to valuation adjustments. Although fundamentals are still improving, investors should consider valuation levels relative to interest rate expectations and avoid excessive concentration in a single segment.

Are large tech stocks experiencing structural divergence?

In 2026, some tech giants are seeing a significant acceleration in profit growth. Evercore ISI strategists report that nine core tech companies are the main drivers of upward revisions in earnings expectations. After recent earnings reports, Alphabet and Meta's 2026 EPS forecasts were raised by 25% and 10%, respectively. Alphabet's Q1 2026 revenue reached $109.9 billion, up 22% YoY, with net profit of $62.58 billion, well above market expectations. Google Cloud revenue grew 63% YoY, becoming a key growth engine.

Meanwhile, market attitudes toward tech giants are diverging. For example, despite steady revenue and profit performance, Microsoft’s stock has not surged significantly, with some trading days even under pressure, as concerns grow that its AI capital expenditure expansion is outpacing profit realization. Similar issues are seen with Meta, which, despite strong advertising revenue, has raised its full-year capital expenditure guidance, reminiscent of the "metaverse" era's heavy investments.

This divergence stems from a shift in market focus from "technological competition" to "business realization" of AI. Companies with clearer commercialization paths, stronger capital discipline, and healthier cash flows are gaining higher acceptance; those with large infrastructure investments but uncertain profit conversion face stricter scrutiny. Google and Amazon, with clear and verifiable AI profit paths, are winners this earnings season. For investors, choosing among tech giants should not only consider the scale of AI investment but also whether AI has become a real driver of overall performance, profit margin improvement, or cash flow generation.

Is there a window for consumer sector allocation?

Against the backdrop of sustained enthusiasm for tech stocks, the value of consumer stocks is being reassessed. CITIC Securities' mid-2026 investment strategy explicitly states that with record-high tech sector concentration, the start of a low-interest-rate era, and supply-side clearing, the "rebalancing" value in consumer allocation has emerged. In April, CPI growth reached 1.2%, with core CPI maintaining above 1% for four consecutive months, and PPI turning positive and continuing to strengthen, signaling price recovery.

Cinda Securities notes that in Q1 2026, signs of consumer recovery became more evident. New consumption segments like trendy toys and smart glasses continue rapid expansion, while demand for essential consumer goods remains steady. On allocation strategies, China Merchants Securities advocates a "yield as an anchor, growth as wings" approach: defensive stocks like Yum China and Master Kong with stable dividends and cash flows, and growth stocks like Pop Mart (overseas expansion) and Atour (anti-involution/repositioning for higher-end) benefiting from structural upgrades and globalization.

The consumer sector's rebalancing window is not based on a strong recovery expectation. The current recovery is characterized by mild, selective structural improvements rather than rapid overall growth. Valuation-wise, the sector's institutional allocation has fallen to about 40% of the "core asset" level, providing a relatively low crowding and high margin of safety. If consumer confidence shows marginal improvement in H2 2026, there could be opportunities for "dividend support + earnings upgrades." For multi-sector investors, modestly increasing consumer exposure amid high tech holdings can help build a more resilient portfolio.

What stage is the Hong Kong market in?

Since 2026, the Hong Kong market has been relatively weak, with the Hang Seng Index experiencing volatility and corrections in May, mainly due to high US bond yields and geopolitical tensions. However, this phase of weakness creates space for valuation recovery in sectors with improving fundamentals. CITIC Securities' H2 2026 Hong Kong investment strategy notes that after four rounds of significant outflows starting in Q4 2025, foreign capital has shown signs of returning since mid-May 2026, and southbound funds may accelerate their deployment. The overall outlook for H2 remains optimistic.

Sector-wise, divergence is also evident. AI and semiconductor stocks perform strongly; for example, Huahong Semiconductor and SMIC each gained over 10% and 5% in a single day in May, and Lenovo hit new highs driven by AI PC penetration. Cinda International reports short-term optimism for AI, citing recent financing valuations and continued positive earnings reports in the chip industry. Additionally, China Telecom and China Unicom launched token-based computing power services, providing stable income and growth potential. Citigroup's H2 2026 Hong Kong top picks include Tencent, AIA, and Ctrip, with new additions like Minmetals Resources, CICC, Lankou Technology, and ASMPT.

However, it’s worth noting that Citi prefers to invest in A-shares over H-shares in H2, given the higher proportion of tech stocks and better liquidity in A-shares, especially in a low-rate environment. This suggests that investors should focus on stocks with more fully priced valuation risks and stronger fundamentals. Currently, the Hong Kong market is closer to a complex bottoming phase; a true reversal requires clearer profit improvement signals. Given ongoing external uncertainties, Hong Kong stock allocation should remain cautious, with gradual exposure increases as market sentiment improves.

Summary

In 2026, the global stock markets are undergoing a structural reshaping driven by institutional capital flows, expanding AI infrastructure, and evolving regulatory environments. Amid US economic resilience exceeding expectations and Fed policy uncertainties, combined with China's production-driven growth and consumption weakness, the core stock selection logic has shifted from macro-driven narratives to a "top-down cycle positioning—bottom-up fundamental validation" framework. AI computing demand is spreading from GPUs to network, storage, and servers across the entire infrastructure chain. After the Philadelphia Semiconductor Index's nearly 82% rise in the first 100 trading days, market valuation logic is shifting from capacity expansion expectations to profit realization validation. Internal divergence among large tech stocks is evident: Alphabet and Amazon are recognized for their clear AI commercialization paths, while some companies face stricter scrutiny amid heavy capital expenditure. The consumer sector, with high tech holdings, low interest rates, and supply-side clearing, begins to show "rebalancing" value; the Hong Kong market, after a correction, is returning to reasonable valuation levels with signs of foreign capital inflow. Ultimately, whether in A-shares, US stocks, or Hong Kong stocks, a comprehensive allocation strategy should be based on a layered assessment of macro cycles, industry prosperity, and individual fundamentals, employing a stratified approach to navigate market uncertainties.

FAQ

Q: What is the core impact of the macro environment on stock allocation in 2026?

A: The key impact is that US bond yields remain high, with economic resilience driven by supply chain disruptions and capital expenditure support, which has limited sustainability. Uncertainty in yield curve pricing reduces expectations for valuation expansion, making earnings quality and sustainability more critical for stock selection.

Q: Has the AI theme's investment logic been fully digested?

A: Capital expenditure cycles for AI infrastructure are still ongoing. Major cloud service providers are expected to spend about $520 billion on AI in 2026, up roughly 30% from the previous year. But market focus has shifted from "who is building AI" to "who can profit from AI," with the narrative evolving from infrastructure to application and commercial realization.

Q: What is the current allocation value of the consumer sector?

A: Institutional allocation in consumer stocks has fallen to a relatively low level. The low-interest-rate environment and marginal improvements in certain sub-sectors (like sustained CPI recovery) provide valuation support. However, the recovery remains mild and structurally selective, so allocation should follow a "yield as an anchor, growth as wings" approach rather than full-scale buying.

Q: Are valuations in the semiconductor sector too high?

A: The Philadelphia Semiconductor Index's forward P/E is about 26x, above the 10-year average of 21x, but some memory companies with significant profit improvements still have P/E ratios below the S&P 500 average. Whether valuations are too high depends on whether earnings growth can sustainably offset valuation expansion pressures, requiring specific fundamental analysis.

Q: What are the main opportunities and risks in the Hong Kong market?

A: Opportunities include valuation normalization, marginal foreign capital inflows, and potential acceleration of southbound funds. Risks involve the ongoing need to verify corporate earnings sustainability and the high volume of stock lock-up releases in Q3, which may impact liquidity. The Hong Kong market is more suitable for structural allocation rather than broad deployment.

Q: How should investors with different risk preferences allocate?

A: Conservative investors can focus on high-dividend consumer stocks and defensive sectors like telecom; balanced investors can allocate to semiconductor equipment, AI infrastructure, and other validated order tracks while maintaining moderate consumer exposure; growth-oriented investors should look at undervalued tech stocks with clear fundamentals, but must control position sizes carefully.