We recently identified the best dow stocks according to hedge funds and Microsoft Corporation (NASDAQ:MSFT) is one of the best stocks to buy, however it’s not the best. To see the best Dow stock to buy now, go to 8 Best Dow Stocks to Buy According to Hedge Funds.
On May 17, the Dow Jones Industrial Average (^DJI) closed out at record highs, crossing the 40,000 milestone for the first time ever. However, this was a little shortlived as the index is down nearly 2.35% since that day, as of May 23. While the index seems to be underperforming the S&P 500 and NASDAQ, it doesn’t fully cover the market conditions like the latter two. Nevertheless, the S&P 500 and NASDAQ’s performance is mostly dominated by mega-cap tech stocks, especially NVIDIA Corporation (NASDAQ:NVDA), which isn’t a part of the Dow Jones index.
Dow Bucks Trend, Falls Despite NVIDIA’s Upbeat News
NVIDIA Corporation (NASDAQ:NVDA) reported its first-quarter 2025 earnings on May 22. Despite record numbers, the market failed to rally along with the company. This includes the Dow Jones index as all 30 of its components ended the day in red on May 23, including some of the best Dow stocks that are direct AI beneficiaries such as Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT).
In its Q1 2025, NVIDIA Corporation (NASDAQ:NVDA) generated a revenue of $26.04 billion, which was up over 262% year-over-year and surprised the consensus estimates by $1.45 billion. The company reported earnings per share (EPS) of $6.12, an over 460% increase year-over-year. Moreover, NVIDIA Corporation (NASDAQ:NVDA) announced a 10 for 1 split, which will take effect on June 7. For the second quarter, NVIDIA Corporation (NASDAQ:NVDA) expects a revenue of $28.0 billion. The company predicts that the automotive sector will emerge as the leading enterprise vertical within its Data Center division in the current year. At its Q1 2025 earnings call, the company’s CFO, Colette Kress said:
“Leading LLM companies such as OpenAI, Adept, Anthropic, Character.AI, Cohere, Databricks, DeepMind, Meta, Mistral, xAI, and many others are building on NVIDIA AI in the cloud. Enterprises drove strong sequential growth in Data Center this quarter. We supported Tesla’s expansion of their training AI cluster to 35,000 H100 GPUs. Their use of NVIDIA AI infrastructure paved the way for the breakthrough performance of FSD Version 12, their latest autonomous driving software based on Vision. Video Transformers, while consuming significantly more computing, are enabling dramatically better autonomous driving capabilities and propelling significant growth for NVIDIA AI infrastructure across the automotive industry. We expect automotive to be our largest enterprise vertical within Data Center this year, driving a multibillion revenue opportunity across on-prem and cloud consumption.”
After reporting stellar earnings, NVIDIA Corporation’s (NASDAQ:NVDA) share price crossed the $1000 mark for the first time and was 9.3% higher in a day, at the May 3 market close. Nevertheless, the company failed to rally the market with it as the S&P 500 was down almost 0.75% during the same period, the NASDAQ-composite recorded a decline of 0.4% and the Dow Jones index experienced its worst day in almost 14 months declining by over 1.5%.
Jim Cramer: Celebrating the 40K Milestone
Even though the Dow Jones index is underperforming other indices in 2024, CNBC Mad Money host, Jim Cramer still believes in celebrating its 40,000 points milestone. On May 20, he urged the investors to appreciate the market’s progress despite past downturns. Cramer emphasized that while the Dow does not fully represent the market like the S&P 500, it reflects a team effort across various sectors, which should have been demolished by the challenges they faced, such as the Federal Reserve’s rate hikes, inflation, and supply chain issues during the Covid-19 pandemic, yet they thrived. He acknowledged the potential for market declines but stressed the importance of recognizing the achievements of these stocks and companies over the years.
Cramer mentioned that he started as a summer associate in 1983 at Goldman Sachs when the Dow was just over 1000 points, the market was full of bears in multiple sectors but the stock market “left them behind.” He added that the index going from 1000 to 40,000 shows the strength of these companies and that they “will make you money.”
In light of these comments, some of the best Dow stocks include Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Visa Inc. (NYSE:V). You can also take a look at the 15 Best S&P 500 Dividend Stocks To Buy Now.
Pixabay/Public Domain
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 293
Microsoft Corporation (NASDAQ:MSFT) is a world-renowned developer and provider of software, services, devices, and solutions. Microsoft Corporation (NASDAQ:MSFT) was held by 293 hedge funds in the first quarter and the stakes amounted to $88.16 billion. Bill & Melinda Gates Foundation Trust is the top shareholder of the company and has a position worth $15.356 billion as of the first quarter, representing 33.48% of the portfolio.
On May 22, Microsoft Corporation (NASDAQ:MSFT) announced that, in collaboration with AI firm G42, it will build a data center in Kenya worth $1 billion. Under the partnership, the companies will work with local firms for the development and research of a local language AI model, construct an East Africa Innovation Lab, and work with the local government.
Vulcan Value Partners stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its first quarter 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software company with a broad range of offerings including Microsoft office, gaming, Azure cloud computing, LinkedIn, and more. It was a material contributor for the second consecutive quarter, and we discussed it at length in last quarter’s letter. The company continues to execute well.”
Microsoft Corporation (NASDAQ:MSFT) is number two on our list of the best Dow stocks. Click to see the other 7 Best Dow Stocks to Buy Now.
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure. None. This article is originally published at Insider Monkey.