As artificial intelligence grows and the semiconductor industry undergoes a significant transformation, Nvidia is displacing rival chipmaker Intel in the Dow Jones Industrial Average, upending the blue-chip index.
On November 8th, the transition will occur. Additionally, S&P Dow Jones said in a statement that Sherwin Williams will take the position of Dow Inc. in the index.
After soaring by around 240% last year, Nvidia’s stock has risen more than 170% so far in 2024 as investors have flocked to acquire stock in the AI chipmaker. With a market valuation of $3.3 trillion, Nvidia is now the second-largest publicly listed company behind Apple.
Nvidia’s stock increased 1% on Friday. In extended trade, Intel’s stock fell 1%.
To construct computer clusters for major AI projects, businesses like Microsoft, Meta, Google, and Amazon are buying large amounts of Nvidia’s graphics processing units (GPUs), including the H100. In each of the last five quarters, Nvidia’s revenue has more than quadrupled, and in three of them, it has tripled. The business claims that the demand for Blackwell, their next-generation AI GPU, is “insane.”
Four of the six trillion-dollar tech firms are now included in the index after Nvidia was added. Alphabet and Meta are the two that are not included on the Dow.
Intel has been struggling while Nvidia has been booming. Intel, the once-dominant manufacturer of PC processors, has lost market dominance to Advanced Micro Devices and hasn’t advanced much in artificial intelligence. Due to production issues and increasing competition for its core CPUs, Intel’s stock has dropped more than half this year.
The board’s audit and finance committee authorized cost and capital reduction initiatives, including cutting Intel’s workforce by 16,500 people and shrinking its real estate footprint, the company stated in a filing this week. In August, the job losses were first made public.
The share price of each of the 30 stocks that make up the Dow is used to determine its weight rather than the overall market value. When Nvidia announced a 10-for-1 stock split in May, it improved its chances of being included in the index. The action cut the price of each share by 90% without changing the company’s market capitalization, enabling it to join the Dow without being very heavily weighted.
The index hasn’t changed since Amazon took the position of Walgreens Boots Alliance in February. The Dow has been lagging behind in terms of exposure to the biggest tech firms over the years. A committee selects the S&P Dow Jones Indices equities for the index.
