9 Best Dow Stocks to Buy According to Analysts

3. Microsoft Corporation (NASDAQ:MSFT)

Average Upside Potential as of October 23: 17.75%

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) has emerged as the biggest winner amid the artificial intelligence race owing to its multibillion-dollar investments in OpenAI and other generative A.I. innovations. Nevertheless, the company boasts a robust business empire spanning software, cloud computing, gaming, and devices, which is why it is one of the best Dow stocks to buy, according to analysts.

Microsoft Corporation (NASDAQ:MSFT)’s Azure cloud computing division has benefited most from A.I., as businesses use its platform to develop their own A.I. solutions. Similarly, as evidenced by revenue growth of between 29% and 30% over the last few quarters, the unit is becoming a major contributor to underlying growth. The business is looking at A.I. to support growth in areas other than cloud computing.  Search is one area benefiting from Microsoft A.I. investments following the integration into Bing search to better compete against Google.

Another significant success story for A.I. is its GitHub Developer platform, where users have resorted to Copilot. This AI assistant can offer suggestions while developers type and even finish coding tasks.   Additionally, Microsoft Corporation (NASDAQ:MSFT) is pursuing growth in gaming following its acquisition of Activision Blizzard, which provides another avenue for generating revenues and long-term value.

While the stock trades at a 10.5% premium with a price-to-earnings multiple of 35.5, it is expected of a company with tremendous opportunities for growth. The stock rewards investors with a 0.79% Dividend yield for generating passive income. Likewise, Wall Street analysts rate it as a buy with an average price target of $503.38, implying a 17.75% upside potential.

Additionally, Insider Monkey’s Q2 data reveals that 279 hedge funds have invested in Microsoft Corporation (NASDAQ:MSFT), making it one of the most popular stocks among hedge funds at the moment.