The Nasdaq Composite (NASDAQINDEX: ^IXIC) plunged 10.4% in the first quarter of 2025. Oil stock Chevron (NYSE: CVX), however, bucked the broader market trend and surged 15.5% instead in Q1, according to data provided by S&P Global Market Intelligence.
Energy was among the best-performing sectors in Q1. As one of the world's largest oil and gas producers, Chevron stock rode the energy rally. There was, however, a lot more to Chevron stock's rise in Q1 than just that.
Strong numbers and an acquisition update drove Chevron stock higher
Chevron increased its dividend for the 38th consecutive year in Q1 and issued encouraging production and cash flow guidance through 2026, backed by a strong operational performance for 2024.
2024, in fact, was a record year for Chevron on two parameters. Its worldwide and U.S. production jumped 7% and 19%, respectively, to a record high, driven largely by growth in the Permian Basin. The oil and gas giant also returned a record $27 billion to its shareholders in the year in the form of dividends and share repurchases.
Chevron also started several projects in 2024, including in the Gulf of Mexico, which President Donald Trump renamed via executive order the Gulf of America, and Kazakhstan. Meanwhile, it expects to cut costs by $2 billion to $3 billion by the end of 2026. Thanks to its cost-reduction initiatives and production growth, Chevron expects to generate incremental free cash flow worth nearly $9 billion between 2025 and 2026 at a Brent Crude oil price of $60 per barrel.
Aside from these numbers, two other factors sent Chevron stock soaring in the latter half of March and contributed much to its Q1 gains.
First, crude oil prices rebounded in the last couple of weeks of March, lifting Chevron stock higher. Second and more importantly, Chevron revealed in a regulatory filing that it had acquired 5% stake in Hess between January and March 2025, reflecting the oil giant's confidence in closing the impending acquisition. Chevron agreed to acquire Hess in late 2023, but arbitration proceedings have delayed the $53 billion all-stock deal.
Is Chevron stock a buy after its recent fall?
Chevron stock has, unfortunately, given up all of its Q1 gains in April after President Trump's tariffs rattled the stock markets and sent crude oil prices plunging on fears of a global recession. Chevron stock has already fallen 14.9% so far this month, as of this writing.
This is an opportunity to buy Chevron stock. Chevron is one of the largest oil and gas producers in the world and has weathered many a storm over its 145 years of existence. With the oil giant growing its production and cutting costs at the same time, this 4.8%-yielding stock should still be able to generate strong cash flows and pay bigger dividends despite lower oil prices.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.
