In a significant change to the Dow Jones Industrial Average, Nvidia will replace longtime rival Intel in the prestigious index, reflecting the rapid growth in artificial intelligence and shifting dynamics within the semiconductor sector. The switch will take effect on November 8. Additionally, Sherwin Williams will replace Dow Inc. in the index, according to S&P Dow Jones.
This change comes as Nvidia continues to see record-breaking gains in 2024, with its stock surging by over 170% following a 240% increase last year. The AI chipmaker’s market valuation has reached a staggering $3.3 trillion, trailing only Apple in terms of publicly traded company value. Nvidia’s advanced graphics processing units (GPUs) like the H100 have become essential components for tech giants including Microsoft, Meta, Google, and Amazon, which are purchasing these GPUs in bulk for AI and machine learning projects. Demand for Nvidia’s forthcoming AI GPU, Blackwell, has been described as “insane,” further emphasizing its dominance in the field.
Nvidia’s ascent brings four of the six trillion-dollar technology firms into the Dow, with Alphabet and Meta being the only exceptions. The company’s impressive stock rally was helped by a 10-for-1 stock split announced in May, which reduced its share price by 90%, facilitating its addition to the Dow without disproportionately influencing the index’s price-weighted structure.
In contrast, Intel has faced significant setbacks, with its stock declining over 50% this year. Once a leader in PC chip production, Intel has lost considerable ground to competitors like AMD and struggled to penetrate the AI sector. These challenges have been compounded by manufacturing issues and increased competition. Intel recently revealed plans to cut 16,500 jobs and reduce its real estate holdings, a part of cost-saving measures approved by the board’s audit and finance committee.
This change marks the Dow’s first adjustment since Amazon replaced Walgreens Boots Alliance in February. Historically, the index has lagged in adding the largest technology firms, but the inclusion of Nvidia underscores its commitment to capturing the growing influence of the tech industry.