Yahoo Finance reported on November 5 that the Dow Jones Industrial Average tumbled 3.4%, or more than 1,800 points, while the S&P 500 fell 4.4% and the Nasdaq Composite sank 5.5% into correction territory. Chip stocks took the brunt of the damage, with AI chip designers and memory makers among the hardest hit. The slide erased the gains from a day earlier, when the Dow had jumped 3% for its best session of 2026 after Democrats won control of both chambers of Congress, Yahoo Finance wrote on November 4. By mid-session Thursday, the index was heading for its worst second day after a midterm election in data going back to 1896, the outlet noted.
The Dow’s Safe-Haven Run Cracks
For most of the week, the Dow had looked like the sheltered corner of the market. Yahoo Finance reported on November 2 that the Dow edged up 0.4% while the Nasdaq dropped roughly 1% as investors rotated out of technology names and into consumer cyclical and financial services shares, which left the Dow looking like the market’s relative winner. On Thursday, that cushion gave way, as the focus turned to what a Democratic Congress could mean for the AI buildout, and for the data centers driving it in particular. You might also be interested in reading our piece on how the AI chip leader’s growth compares with the cloud software giant’s.
The reversal was fast and violent. Shay Boloor, chief market strategist at an equity research firm, pointed out that the VIX volatility index posted its biggest one-day jump in more than two years. It took the Nasdaq just six minutes on Thursday to erase its entire post-election rally, and even Wednesday’s winners such as the iPhone maker turned lower. That Wednesday buying had been helped by falling oil prices, while the Windows maker jumped 6% to a record high.
A Jobs Report Steadies the Tape
Friday brought a partial rebound. Yahoo Finance reported on November 6 that the US added 165,000 jobs in October, and the Nasdaq gained 1.9% while the S&P 500 rose 1% and the Dow added 0.1%. For a closer look at one of the biggest AI spenders caught in the sell-off, we recently covered why the search giant’s low price-to-earnings ratio can mislead. The stronger jobs data lifted Treasury yields and kept Federal Reserve policy at the center of market attention, Reuters reported on November 6, as the price-weighted index of 30 major US companies held roughly flat.
Our Methodology
For this article, we used Finviz to screen Dow Jones Industrial Average components for stocks rated Buy or better by analysts, with an average price target at least 10% above the current price. We then ranked them by average upside potential, based on analysts’ average price target, in ascending order. We also list short interest and the number of hedge fund holders as of Q2 2026.
Note: All data was sourced on November 6, 2026.
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. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 612% since May 2014, beating its benchmark by 375 percentage points (see more details here).
10 Best Dow Stocks to Buy for 2027
10. Microsoft (NASDAQ:MSFT)
Number of Hedge Fund Holders: 273
Short Interest: 0.90%
Average Upside Potential: 19%
Microsoft’s cloud engine is speeding up from an already enormous base. Azure revenue grew 48% in the fiscal first quarter, ahead of the company’s own forecast, even though some third-party data center capacity arrived late. Management guided Azure growth of 49% to 50% for the fiscal second quarter, and Chief Financial Officer Amy Hood said customer demand continues to exceed available supply.
Analysts took the report as proof that AI spending is turning into revenue. On October 29, TD Cowen’s Derrick Wood raised his Azure growth estimate for fiscal 2027 and lifted his price target to $650 from $625. William Blair’s Jason Ader said the results reinforced his view that the AI thesis is playing out across both the infrastructure and application layers. BofA’s Tal Liani reiterated a Buy rating and argued that Microsoft’s reach across infrastructure, AI models and software gives it several ways to earn money from AI demand.
Contracted demand adds a cushion, since commercial remaining performance obligation, a gauge of revenue already signed, reached $677 billion. That backlog, plus efficiency gains that squeeze more revenue from existing GPU and CPU capacity, is why bulls see cloud growth holding up while new capacity arrives late.
Read our analysis on Microsoft (NASDAQ:MSFT) here: Microsoft (MSFT) Built a $100B Azure. Can It Outrun Its Own Spending?
9. Goldman Sachs (NYSE:GS)
Number of Hedge Fund Holders: 92
Short Interest: 2.42%
Average Upside Potential: 20%
Goldman Sachs is the Dow’s most direct play on a busy capital markets cycle. Third-quarter net revenues reached $18.68 billion, the second highest in the firm’s history. Equities trading drove much of the result, with revenue up 72%, while advisory revenue set a quarterly record as completed mergers and acquisitions climbed.
The firm still ranks first in announced M&A, and management said its investment banking backlog stayed strong even after a strong quarter, helped by steady replenishment in equity underwriting. Executives also noted that private equity sponsors are taking a smaller share of announced deals than they historically have, which leaves room for activity to pick up further when that group returns. Chief Executive David Solomon said clients keep turning to the bank for advice, execution and financing.
The steadier side of the business matters just as much. Assets under supervision hit a record $4.1 trillion, supported by long-term net inflows for a 35th straight quarter, which feeds management fees that do not depend on deal timing. Management also raised its full-year fundraising target for alternative assets, which adds fee income that moves less with market swings.
Our analysis on Goldman Sachs (NYSE:GS) is available here: Jim Cramer on Goldman Sachs (GS): “It’s Come Down Greatly”
8. UnitedHealth Group (NYSE:UNH)
Number of Hedge Fund Holders: 143
Short Interest: 1.56%
Average Upside Potential: 20%
UnitedHealth’s pitch is a margin repair that is starting to show up in the numbers. Adjusted earnings of $4.69 per share in the third quarter were well above the year-earlier level, on revenue that was essentially flat. The medical care ratio, the share of premiums spent on patient care, fell to 88.4%, which the company tied to medical cost management, pricing discipline and changes to benefit design.
Management responded by raising its full-year adjusted earnings outlook to at least $20.50 per share and reaffirming a long-term growth target of 13% to 16%. UnitedHealthcare expects Medicare Advantage margins near the top of its range this year, and executives described 2026 as the trough for core Medicaid margins, a framing that points to gradual improvement from here.
Technology and scale give the story more support. Leaders pointed to AI tools alongside clinical care management as levers on cost, and the company is simplifying and reducing prior approvals. Optum Rx, meanwhile, now draws more than half of its members from outside customers rather than from UnitedHealthcare, which gives the pharmacy arm growth that does not hinge on the insurer’s own enrollment.
Check out our analysis on UnitedHealth Group (NYSE:UNH) here: UnitedHealth (UNH): Does Optum Truly Diversify Its Earnings Risk?
7. Amazon (NASDAQ:AMZN)
Number of Hedge Fund Holders: 369
Short Interest: 0.95%
Average Upside Potential: 25%
Amazon Web Services is accelerating at a scale few businesses have ever reached. AWS revenue grew 39% in the third quarter, its fastest pace in nearly five years, and Chief Executive Andy Jassy said growth should top 40% in both 2027 and 2028. Behind that confidence sits an AWS backlog of $578 billion, which is growing at a triple-digit rate.
Analysts focused on what that growth does for profits. On October 29, UBS analyst Stephen Ju wrote that he expects AWS operating margins of 46% in 2027, well above what the Street expects. KeyBanc Capital Markets’ Justin Patterson said AWS is well positioned to capture AI demand, from companies modernizing how they work to new consumer assistants. The quarter also produced Amazon’s highest operating margin ever, which suggests the heavy investment has not diluted profitability.
Amazon’s own chips add to the case, because customer commitments for its Trainium and Graviton processors rose many times over from a year earlier. Bedrock, the service that lets companies build on AI models, is the fastest-growing multibillion-dollar business in AWS history, Jassy said. Management says that demand is already signed, which is why it keeps spending on capacity.
Here is our analysis on Amazon (NASDAQ:AMZN): Amazon (AMZN) Trades at 24 Times Forward Earnings. Can Its Cash Engines Fund the Robotaxi Bet?
6. Boeing (NYSE:BA)
Number of Hedge Fund Holders: 90
Short Interest: 1.85%
Average Upside Potential: 32%
Boeing’s case rests on a backlog that now covers years of output. The planemaker ended the third quarter with a record $745 billion of orders, and it delivered 161 jets in the quarter, its best showing since 2018. Defense backlog also set a record, and Global Services, the parts and maintenance arm, posted double-digit margins, which adds steadier income alongside the cyclical aircraft business.
Regulatory and defense wins are filling in the story. The Federal Aviation Administration granted amended type certification to both the 737-7 and the 737-10, and the US Navy selected Boeing to design and build its F/A-XX next-generation fighter. That award is not yet counted in the backlog, so it represents additional visibility still to come.
Cash is the next proof point. Management laid out free cash flow targets that step up each year to $10 billion in 2029, and said a record backlog with improved pricing should underpin an improving margin profile. Executives also described the range of outcomes for the business as narrowing, which they said gave them the confidence to publish a multi-year plan.
Learn more from our analysis on Boeing (NYSE:BA) here: A $715B Order Book and Fighter Jet Wins: Time to Buy Boeing (BA)?
5. Salesforce (NYSE:CRM)
Number of Hedge Fund Holders: 99
Short Interest: 3.50%
Average Upside Potential: 33%
Salesforce is showing that its AI products are becoming a business of their own. Agentforce annual recurring revenue topped $1.5 billion in the fiscal second quarter, up more than 240% from a year earlier, and bookings for its premium Agentforce editions more than doubled from the prior quarter.
That momentum is lifting the core. Current remaining performance obligation, a gauge of contracted revenue, grew 14% in constant currency, and the company raised its full-year revenue outlook, citing organic strength in Agentforce, Data 360 and Slack. Free cash flow rose 81% in the quarter, which shows the AI push is not coming at the expense of cash generation.
Partnerships widen the reach. Salesforce announced Claudeforce, a planned Anthropic partnership that brings Claude into its data, applications and workflows. Management also said the number of customer accounts with agents in production grew sharply from the previous quarter, a sign that adoption is moving beyond pilot projects. Slack also delivered its fastest quarterly growth in net new annual order value since Salesforce acquired it, giving the AI push a workplace channel beyond sales and service.
Our analysis on Salesforce (NYSE:CRM) can be found here: Salesforce (CRM) Trails the Market in 2026: What Could Fuel a Re-Rating?
4. Alphabet (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 275
Short Interest: 1.34%
Average Upside Potential: 37%
Alphabet’s third-quarter report put the AI payoff on display, even as it spooked investors. Google Cloud revenue more than doubled, rising 103%, while the unit’s operating margin widened to 36.2%, showing that the growth is profitable even at this scale.
A cloud backlog of $561 billion gives that growth runway, with just over half of it expected to turn into revenue over the next two years. Demand is broadening too. Chief Executive Sundar Pichai said the Gemini app has reached 1 billion users, which he called the fastest-growing product in Google’s history.
The worry is spending. Capital expenditures keep climbing, and free cash flow turned negative in the quarter, which weighed on the stock. Bulls counter that operating income still grew strongly and that the earnings miss traced to an unrealized loss on the company’s SpaceX stake, not to the core business. Search, the largest business, also kept growing, with Pichai saying AI is lifting query volume, including commercial queries. Management expects capital spending to rise significantly next year, so the bull argument rests on cloud contracts converting into revenue on schedule.
Our analysis on Alphabet (NASDAQ:GOOGL) is available here: Alphabet (GOOGL): Does Its Valuation Account for Waymo’s Potential?
3. Cisco Systems (NASDAQ:CSCO)
Number of Hedge Fund Holders: 101
Short Interest: 1.53%
Average Upside Potential: 44%
Cisco is turning AI data center spending into hard orders. Hyperscalers placed $9.3 billion of AI infrastructure orders with the company in fiscal 2026, several times the prior year’s level, and management expects those customers to generate $7.5 billion of AI infrastructure revenue in fiscal 2027.
The strength is not confined to the largest cloud buyers. Networking product orders climbed 40% in the fiscal fourth quarter, the eighth straight quarter of double-digit growth, while newer Wi-Fi 7 and security products added breadth. Chief Executive Chuck Robbins describes the period as the early stage of a networking super cycle, as customers upgrade networks for AI traffic.
Chief Financial Officer Mark Patterson called that revenue target prudent, because hyperscaler orders are large, uneven and usually placed well ahead of delivery, so the company enters the year with a sizable order book. Enterprise, public-sector and telecom orders also grew at double-digit rates, which means demand is not resting on a few buyers. Gross margin dipped as faster hardware growth changed the sales mix, but the growing order book gives Cisco room to absorb the shift.
You can read our analysis on Cisco Systems (NASDAQ:CSCO) here: Cisco (CSCO): Can It Profit From Helping Customers Spend Less on AI?
2. Caterpillar (NYSE:CAT)
Number of Hedge Fund Holders: 84
Short Interest: 1.65%
Average Upside Potential: 49%
Caterpillar has become a quiet beneficiary of the data center buildout. The company posted its highest sales quarter ever, and its backlog swelled to a record $78 billion, nearly double the level of a year earlier. Sales of power generation equipment to users jumped 75% as customers sought turbines and large engines for data centers.
Demand is running ahead of supply, which is the bullish part. Orders for large reciprocating engines now run into 2029, with turbine orders reaching 2030. Chief Executive Joe Creed said customers still want more power than the company can supply, so Caterpillar is ramping production as quickly as it can.
Profitability is holding up as volumes climb. The adjusted operating margin expanded sharply from a year earlier, and Caterpillar returned cash to shareholders through dividends and buybacks while still funding the expansion. Management said full-year sales should grow in the mid-to-high teens, supported by a record backlog and healthy end markets across construction, mining and power. Frame agreements in the pipeline convert into orders over time, which helps the company plan production beyond the current backlog.
Our analysis on Caterpillar (NYSE:CAT) is here: Caterpillar (CAT): A Cyclical Machine Maker Meets a Growth-Stock Valuation
1. Nvidia (NASDAQ:NVDA)
Number of Hedge Fund Holders: 28
Short Interest: 1.30%
Average Upside Potential: 76%
Nvidia is still growing faster than almost any company its size. Revenue in the fiscal second quarter more than doubled to $96.2 billion, and the company guided the fiscal third quarter to about $108.0 billion without assuming any data center compute revenue from China. That leaves the outlook free of one of the biggest geopolitical swing factors.
The next leg is Vera Rubin, which Nvidia said is ramping into full production, with racks already running at partners including CoreWeave, Google Cloud, Microsoft Azure and Oracle Cloud Infrastructure. Management also said it expects to grow revenue by about 70% in fiscal 2028 and called that outlook supply constrained. It pointed to hyperscaler capital spending reaching $1.3 trillion next year as the demand behind it.
That visibility explains the preparation. Inventory rose in preparation for the Vera Rubin launch, giving the company product ready as customers place orders, and Nvidia returned $26 billion to shareholders in the quarter through buybacks and dividends. Gross margin held steady on a similar product mix, a sign the growth is not coming at the expense of profitability.
Read more in our analysis on Nvidia (NASDAQ:NVDA) here: Nvidia (NVDA) Is Trading Like Growth Will Stop. The Numbers Say Otherwise.
READ NEXT: Nvidia Is Becoming More Than a Chipmaker. Can it Sustain Its Exceptional Margins? and Amazon vs. Alphabet: Is GOOGL’s Cloud Growth Being Undervalued?
