These Were the 3 Worst-Performing Stocks in the Dow Jones Industrial Average in August 2025

Key Points

• The Dow Jones index had more leaders than laggards in August.

• The worst-performing Dow stocks fell on earnings, but not all numbers were bad.

• 10 stocks we like better than Caterpillar ›

The Dow Jones Industrial Average (DJINDICES: ^DJI) moved 3.2% higher in August, with five of its 30 constituent stocks rallying over 10% each. While the laggards didn't decline as sharply, the fall in two of the three worst-performing Dow stocks of August was hard to justify.

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1. Microsoft: Down 5%

Shares of Microsoft (NASDAQ: MSFT) fell 5% last month because investors booked profits after the tech stock soared to all-time highs of $555.45 on July 31, and its market capitalization briefly surpassed $4 trillion for the first time ever.

On July 31, Microsoft posted 18% revenue and 24% net income growth for its fourth quarter, driven by artificial intelligence (AI) and cloud computing. Its cloud computing unit Azure logged the biggest revenue jump of 39% among all products. Microsoft projects double-digit growth in revenue and operating income for fiscal year 2026 (ending June 30, 2026).

2. Caterpillar: Down 4%

Shares of Caterpillar (NYSE: CAT) hit all-time highs of $441.15 on July 31. But unlike Microsoft, Caterpillar's numbers sent the stock 4.3% lower in August.

Caterpillar's second-quarter revenue declined 1%, and earnings per share slumped 16% year over year on unfavorable pricing. Although the construction and mining equipment giant expects higher revenue in 2025, it sees tariffs as a significant headwind to profitability. It projects free cash flow from its machinery, energy, and transportation businesses to be around $7.5 billion in 2025, versus $9.4 billion last year.

3. International Business Machines: Down 3.8%

International Business Machines (NYSE: IBM) stock dropped sharply on July 24 after releasing Q2 numbers and continued to fall through August, losing 3.8% in the month. Ironically, IBM's revenue rose 8% year over year, and management now expects 2025 free cash flow to exceed its guidance of $13.5 billion, driven by growth in software.

Software alone made up 43% of IBM's revenue in Q2. Last year, IBM generated $12.7 billion in FCF.

IBM shares fell because its software revenue growth missed analysts' estimates. Investors know better, though, as the tech stock has recovered 5.5% this month, as of this writing.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.