Is Microsoft Corporation (MSFT) the Best Dow Stock?

We recently published a list of The Best and Worst Dow Stocks. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other Dow stocks.

The Dow Jones Industrial Average is a benchmark index of the top 30 companies in the US. It represents the strength of the US economy and carries great historical significance as well.

It also acts as a reference point for analysts and investors. However, not all stocks within this elite group of companies perform equally. While some thrive on innovation and economic boom, others struggle due to various setbacks and economic trends.

We decided to break down the index and find out the best and worst stocks, looking at what was making them perform unexpectedly this year.

Methodology

In order to come up with our ranking of the best and worst Dow stocks, we first assigned a rank to each stock based on the number of hedge funds holding the stock. We then looked at the short interest in each stock and assigned the top rank to the company with the least short interest.

We then combined the two ranks to see which stock was the best on average. The list is in ascending order, with the best stock taking the number one spot.

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).

A development team working together to create the next version of Windows.

Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 317

Short Interest as of Apr 30, 2025: 0.70%

Microsoft Corporation operates as a supporter and developer of software, devices and solutions, and services. The company generates its revenue through the Productivity and Business Processes, Intelligent Cloud, and More Personal Computing segments. It sells its products through distributors, digital marketplaces, resellers, retail stores, and OEMs.

Microsoft-backed AI startup OpenAI recently entered into a deal with The Washington Post to merge the newspaper’s content into ChatGPT. According to the deal, the chatbot will provide links, summaries, and quotes to the Washington Post’s original articles while answering relevant questions.

Head of Media Partnerships at OpenAI, Varun Shetty, highlights the purpose of this agreement by saying:

“More than 500 million people use ChatGPT each week to get answers to all kinds of questions. By investing in high-quality journalism by partners like The Washington Post, we’re helping ensure our users get timely, trustworthy information when they need it.”

The firm also surprised analysts with faster growth in cloud compared to its competitors. This growth was largely driven by non-AI products, which means the management continues to execute its business strategies perfectly without solely focusing on AI.

Overall, MSFT ranks 1st on our list of best and worst Dow stocks. While we acknowledge the potential of MSFT as an investment, 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. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.