Nvidia to Join Dow Jones Industrial Average, Replacing Intel
Nvidia is set to make a significant entrance into the Dow Jones Industrial Average, taking the place of rival chipmaker Intel. This transition marks a pivotal moment in the semiconductor industry, reflecting the ongoing boom in artificial intelligence (AI) and the shifting dynamics within the tech sector.
As of November 8, Nvidia will officially replace Intel in the prestigious index, a move announced by S&P Dow Jones. This change comes as Nvidia’s stock has surged over 170% in 2024, contrasted with Intel’s staggering decline of more than 50% during the same timeframe. The last adjustment to the index occurred in February when tech giant Amazon was added.
In the latest trading session, Intel shares experienced a slight dip of 1%, while Nvidia saw a modest increase of 1%. The differences in performance between these two companies highlight the evolving landscape of the semiconductor market.
Nvidia’s meteoric rise can be attributed to its dominance in the AI sector. The company has become a key supplier of graphics processing units (GPUs), particularly its H100 model, which has been in high demand among major tech players like Microsoft, Meta, Google, and Amazon. These companies are acquiring Nvidia’s GPUs to build powerful clusters of computers essential for their AI initiatives.
Over the past five quarters, Nvidia has reported revenue growth exceeding 100%, with three of those quarters witnessing a tripling of revenue. The company has also indicated that the demand for its upcoming AI GPU, dubbed Blackwell, is “insane,” further solidifying its position in the market.
With Nvidia’s addition to the Dow, four of the six trillion-dollar tech companies are now represented in the index. The notable exceptions are Alphabet and Meta, which have yet to secure a spot among the 30 components of this influential index.
In stark contrast, Intel has faced significant challenges. Once the leading manufacturer of PC chips, Intel has seen its market share erode due to competition from Advanced Micro Devices (AMD) and has struggled to make substantial progress in the AI arena. The company’s stock has plummeted this year, reflecting these difficulties.
Amidst its struggles, Intel has announced plans to implement cost-cutting measures, including a reduction of its workforce by 16,500 employees and a downsizing of its real estate holdings. These layoffs were initially disclosed in August and highlight the company’s ongoing efforts to stabilize its operations in a challenging market.
The Dow Jones Industrial Average is a price-weighted index, meaning that the share price of its components plays a crucial role in determining the index’s overall performance. Nvidia’s inclusion is expected to have a notable impact on the index, given its substantial market capitalization, which currently stands at $3.3 trillion, making it the second-largest publicly traded company, only behind Apple.
This transition not only reflects Nvidia’s impressive growth trajectory but also underscores the broader shifts occurring within the semiconductor industry as AI continues to reshape technological landscapes. Investors and analysts alike will be closely monitoring these developments as they unfold in the coming weeks.
