The timeless Dow is up 13% in 2025, just shy of 49,000.
Two Dow component brands are poised for success in the new year.
Meanwhile, one of Wall Street’s hottest artificial intelligence (AI) stocks — and a key component of the Dow Jones Industrial Average — may struggle to live up to the hype by 2026.
10 stocks we like better than Visa ›
It’s been another historic year for Wall Street’s premier health barometer Dow Jones Industrial Average(DJINDICES: ^DJI). The iconic index rose 13% last year and is just shy of 49,000 points.
In the 129 years since its inception, the Dow Jones Industrial Average has grown from a 12-stock index focused on industries to its current index of 30 well-known diversified multinational companies. But just because these companies have been historically successful, that doesn’t mean all 30 are worth buying in 2026.
Image source: Getty Images.
As we turn to Wall Street’s next chapter, two Dow stocks stand out as buys in 2026, while another may struggle to justify its premium valuation.
While the Dow Jones Industrial Average is filled with time-tested, profitable companies, the world’s leading payments processor visa(NYSE: V) Become a Genius Buy in the New Year.
Like most financial stocks, Visa is a cyclical company, rising and falling with the health of the U.S. and global economies. However, the peaks and troughs of the U.S. economy are not mirror images of each other. Over the past 80 years, U.S. recessions have lasted an average of only 10 months, while typical economic expansions have lasted about five years. Long-term economic growth should spur consumer and business spending, which is good news for a company that relies on merchant fees to drive earnings.
Visa could also benefit from the Federal Reserve’s ongoing rate-cutting cycle. Lower interest rates are intended to encourage business borrowing and consumer spending. The impact of three quarter-point rate cuts by the end of 2025 should start to show up in economic data in the second half of 2026.
What’s more, Visa is not a lending institution. Focusing solely on payment convenience means it doesn’t have to set aside funds to cover credit card defaults and/or loan losses. When recessions do occur, few financial stocks have historically rebounded faster than Visa.
Another compelling reason to add Visa to your portfolio in 2026 is its opportunities in overseas markets. Visa’s cross-border payment volume has maintained double-digit growth for years, demonstrating the extent of its expansion in international markets.
All told, Visa’s forward price-to-earnings (P/E) ratio is 24, which is 13% lower than its average forward P/E over the past five years.
Image source: Getty Images.
The second Dow Jones Industrial Average component to be its worst performer in 2025 is Health Insurers and Healthcare Providers UnitedHealth Group(NYSE: UNH).
Let’s not beat around the bush — UnitedHealth Group encountered several issues last year, none of which should be glossed over. Foremost among these was management’s failure to recognize changes in Medicare Advantage operating costs and increases in insured member utilization. Combined with a U.S. Department of Justice investigation into its Medicare Advantage billing practices, it’s a perfect storm.
The silver lining for UnitedHealth is that it has faced headwinds before but has continued to grow into a stronger company over time.
UnitedHealth, for example, wasted no time revamping its insurance business. It is exiting some unprofitable Medicare Advantage markets and will seek to raise premiums across its entire health insurance business, where applicable. Because insurance companies take periods of increased payouts as a matter of course, they rarely have any trouble passing on higher premiums to members. This should lead to significant improvement in UnitedHealth’s insurance margins in 2026.
Stephen Hemsley’s return as CEO is another catalyst that could push the stock higher in the new year. In addition to reining in insurance costs, Hemsley is trying to reignite Optum’s growth in health care services, which makes UnitedHealth an exceptional long-term investment. The combination of artificial intelligence (AI) and unification of key platforms should be a boon to Optum Insight, which provides technology-focused solutions to healthcare companies.
After a dismal 2025, UnitedHealth Group stock also has an attractive value proposition. While it trades at 19 times projected 2026 earnings, in line with its five-year average, management’s ongoing changes have the potential to push the company’s earnings per share back to $27.66 in 2024 in a few years.
However, not all Dow stocks are smart buys in the new year. Although it is the face of the artificial intelligence revolution and one of the hottest stocks of the past three years, NVIDIA(NASDAQ: NVDA) Here are the Dow 30 stocks to avoid in 2026.
For the sake of clarity, I no Implying that Nvidia is a terrible company. Instead, its graphics processing units (GPUs) are the first choice for enterprises overseeing AI-accelerated data centers. On a compute basis, no outside competitor can match Nvidia’s GPUs, which results in extraordinary pricing power and strong gross margins.
My concerns about Nvidia in 2026 are threefold.
First, historical precedent suggests that the likelihood of an AI bubble forming and bursting is high. Since the emergence of the Internet in the mid-1990s, every game-changing technology has experienced a bubble burst. While demand for AI infrastructure has been strong, companies appear to be years away from optimizing the technology. If the AI bubble bursts, Nvidia’s stock price will be under a heavy burden.
Secondly, Nvidia must deal with increasingly fierce internal competition. Although its GPUs already outpace external competitors, many of its top net sales customers are developing their own GPUs or solutions for use in their data centers. While this in-house developed technology isn’t as fast as Nvidia’s hardware, it’s significantly cheaper and more readily available. In other words, this could take up valuable data center space from Nvidia or slow down future GPU replacement cycles.
The third and final factor is Nvidia’s valuation. While a forward price-to-earnings ratio of 25 isn’t particularly high, the price-to-sales (P/S) ratio tells a different story. Over the past three decades, no industry-leading company on the leading edge of the next big trend has been able to maintain a P/E ratio of 30 or above. In early November, Nvidia’s price-to-earnings ratio hit 30. Although its P/E ratio has dropped to 25 as sales have increased, this is still a historically high valuation premium.
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Sean Williams works at Visa. The Motley Fool holds positions and recommends Nvidia and Visa. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
2 Dow Stocks to Buy in 2026 and 1 Dow Stock to Just Avoid Buying Originally Posted by The Motley Fool
