The Best and Worst Dow Stocks for the Next 12 Months

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8. Microsoft Corp. (NASDAQ:MSFT)

Upside Potential: 28.2%

Market Cap: $2.78 trillion

Number of Hedge Fund Holders: 317

Microsoft Corp. (NASDAQ:MSFT) develops and markets software, hardware, and cloud services. Its flagship products include the Windows operating system, the Microsoft Office suite, and the Azure cloud platform. Additionally, Microsoft owns LinkedIn, GitHub, and Xbox, extending its influence across various industries.

The Magnificent Seven stocks, the top 7 mega-cap companies, have been under severe scrutiny amid market volatility, tariff and recessionary pressures, and sanity checks on the eye-popping share price rally based on their AI dominance. All of them have corrected significantly YTD, but Microsoft Corp. (NASDAQ:MSFT) has relatively been doing better with its share price down around 8%.

Most investors worry about Microsoft’s slow growth in its cloud business, specifically Azure. In its Q2 2025 results, Azure grew 31% year-over-year, and the company also guided for 31%-32% growth in Q3. However, these numbers came in below expectations, leading to concerns about long-term growth. The company has also lowered its capex on cloud infrastructure, leading investors to believe that a growth reset is around the corner.

Despite these concerns, Microsoft is still delivering solid growth, which is commendable for a company of its size. It remains a consensus Buy with a 1-year median price target of $475, implying a 28% potential upside.

Piper Sandler analyst Brent Bracelin recently revised his earnings estimates lower for the cloud applications and analytics sector, driven by ongoing macro issues. He also believes that investor confidence in application software names has come down and is hurt because of the slowdown in growth. While he lowered his price target for Microsoft to $435 from $520, he maintained his Overweight rating as he believed that valuation multiples appeared attractive, at their lowest in seven years, despite the relatively lower impact of tariffs on the software industry.

The stock was also the best stock among our list of 10 Best Software Stocks to Buy According to Billionaires.

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