Is International Business Machines Corporation (IBM) 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 International Business Machines Corporation (NYSE:IBM) 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).

International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 60

Short Interest as of Apr 30, 2025: 2.27%

International Business Machines Corporation (NYSE:IBM) is an integrated solutions and services provider. The company operates in Infrastructure, Software, and Financing segments. The company is among the top 5 most shorted stocks on the Dow.

To accelerate manufacturing and technology innovation, the tech giant plans to invest $150 billion during the next five years in the US. As part of this investment, more than $30 billion will be allocated to research and development to improve the manufacturing of mainframe and quantum computers in America.

IBM’s CEO Arvind Krishna said on the occasion:

“We have been focused on American jobs and manufacturing since our founding 114 years ago, and with this investment and manufacturing commitment we are ensuring that IBM remains the epicenter of the world’s most advanced computing and AI capabilities.”

Due to the potential negative effects of the U.S. Department of Government Efficiency (DOGE), the company highlighted concerns about its Consulting business over the next few months. CEO Arvind Krishna mentioned that this segment could be at serious risk if discretionary spending cuts are initiated by DOGE.

Despite reporting better-than-expected first-quarter results, the company’s shares fell 5%. Management reiterated its full-year guidance reflecting 5% revenue growth along with the free cash flow generation of $13.5 billion.

Overall, IBM ranks 30th on our list of best and worst Dow stocks. While we acknowledge the potential of IBM 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 IBM 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.