We recently published a list of 11 Best Performing Dow Stocks So Far in 2025. In this article, we are going to take a look at where International Business Machines Corporation (NYSE:IBM) stands against other best performing Dow stocks so far in 2025.
The Dow is a renowned and significant stock market index that measures the performance of 30 publicly traded businesses listed on US stock exchanges, representing a diverse variety of industries.
As of 20 February 2025, the index has steadily increased, rising 14.41% in the last 12 months and 4.21% year to date in 2025. It rose 8.04% over the last six months, mirroring its 8.04% gain in the previous month. Over the long term, it has risen 52.37% in the last five years and has returned an astounding 3,362.55% since 1985.
In comparison, the broader market has outpaced the Dow, gaining 22% in the last year and 4% year to date in 2025. The wider market has risen 8.84% during the last six months, with a 1.13% increase in the last month. Its long-term performance has been favorable, with a five-year gain of 83.28% and a remarkable 3,717.09% increase since 1996. Its superior performance is largely due to the strength of technology and high-growth stocks.
Nonetheless, the Nasdaq has led the market, climbing 28.12% in the last 12 months and 3.53% year to date in 2025. Over the last six months, the Nasdaq has gone up by 11.40%, with 1.04% growth in the last month. Over the last five years, it has surged by 108.45%, proving its dominance in high-growth sectors.
While the Dow has fallen behind the other two markets in recent years, its consistency and solid historical returns underline its long-term investment appeal. The index typically has reduced volatility and concentrates on established blue-chip companies.
According to a report by S&P Dow Jones Indices, the Dow is still a dependable benchmark for US market performance, following 30 blue-chip businesses with strong reputations and consistent growth. Its price-weighted system ensures stability, typically reducing losses during downturns. The index has a historical association with broader markets, but it is less volatile than the broader market due to its emphasis on well-established firms. Despite its small size, the index has shown resilience in bear markets, such as 2009, while also reaping gains during bullish cycles. Its longstanding reputation and exposure to important industries make it a reliable predictor of economic strength.
However, the Dow lost 0.6% on Thursday, February 20, 2025, as U.S. jobless claims surged faster than expected, heightening concerns about the labor market and the overall economic outlook. The wider market fell 0.5%, while the Nasdaq fell 0.7% in early trading, signaling broader market weakness. Investors reacted to economic data and shifting market sentiment as bond yields edged lower, with the 10-year Treasury yield falling to 4.52%.
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Methodology
We began with a pool of 30 stocks from the Dow Jones Industrial Average (DJIA) and identified stocks that have delivered positive returns in 2025 so far. We then picked the top 11 stocks with the highest Year-to-Date return as of February 14. The stocks are ranked in ascending order of their year-to-date performance.
“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).”
International Business Machines Corporation (NYSE:IBM)
Year-to-date return as of February 14: 18.80%
One of the biggest providers of IT services globally, International Business Machines Corporation (NYSE:IBM) continues to dominate the mainframe market and has established software and consulting units specializing in hybrid cloud infrastructure and digital transformation initiatives. Over the past few decades, the firm has had to reinvent itself in response to a shifting industry landscape that affected its initial mainframe business. The business has positioned itself to meet the demands of companies looking for hardware, consulting services, and updates for their IT infrastructure. Along with consulting services for project implementation and maintenance, the company’s software products are being utilized in hybrid cloud-focused initiatives. IBM-assisted hardware can also be used for these projects.
International Business Machines Corporation (NYSE:IBM) stated that there was a high demand for new artificial intelligence projects in its fourth-quarter financial results, which exceeded Wall Street’s estimates. As a result, the stock price was up over 18% so far this year, making it the Best Performing Stock.
International Business Machines Corporation (NYSE:IBM) reported $17.6 billion in revenue for the fourth quarter of 2024, a 1% increase YoY. Strong demand for Red Hat drove double-digit revenue growth in the software area. Its generative AI segment has over $5 billion in total sales, up over $2 billion from the previous quarter, highlighting that businesses worldwide are looking to the company for AI-powered transformation. In 2024, it generated $12.7 billion in free cash flow and $13.4 billion in operating cash flow, displaying a high cash performance.
Oppenheimer believes that the company’s move toward a greater emphasis on software has not yet been completely acknowledged by investors. The investment firm gave the IT behemoth an “Outperform” rating when it first started covering it. The price estimate of $320 per share was established by analyst Param Singh, suggesting a possible upside of over 28%. As the market learns more about International Business Machines Corporation’s (NYSE:IBM) strategy shift to software, Singh also anticipates that the company’s worth will rise over time.
Overall, IBM ranks 1st on our list of Best Performing Dow Stocks So Far in 2025. While we acknowledge the potential for IBM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IBM 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.