Nvidia joins the Dow Jones Industrial Average and replaces Intel

Nvidia replaces competing chip manufacturer Intel in the Dow Jones Industrial Average, a shakeup of the blue-chip index that reflects the boom in artificial intelligence and a major shift in the semiconductor industry.

Intel shares fell 1% in extended trading on Friday. Nvidia shares rose 1%.

The change will take place on November 8th. Besides that Sherwin Williams will replace Dow Inc. in the index, S&P Dow Jones said in a statement.

Nvidia shares have risen over 170% so far in 2024, after rising about 240% last year, as investors rushed to snap up a stake in the AI ​​chip maker. Nvidia's market capitalization has grown to $3.3 trillion, placing it in second place Apple among listed companies.

Companies incl Microsoft, Meta, Google And Amazon are buying Nvidia's graphics processing units (GPUs) like the H100 in bulk to form computer clusters for their AI work. Nvidia's sales have more than doubled in each of the last five quarters and at least tripled in three of them. The company has suggested that demand for its next-generation AI GPU called Blackwell is “insane.”

With the addition of Nvidia, four of the six trillion-dollar technology companies are now included in the index. The two values ​​not included in the Dow are Alphabet and Meta.

While Nvidia was soaring, Intel was slumping. Intel has long been the leading maker of PC chips and has been losing market share Advanced micro devices and has made very little progress in AI. Intel shares have fallen by more than half this year as the company struggles with manufacturing challenges and new competition for its central processors.

Intel said in a filing this week that its board's audit and finance committee approved cost and capital reduction measures, including reducing its headcount by 16,500 employees and reducing its real estate footprint. The job cuts were originally announced in August.

The Dow is made up of 30 components and is weighted by each stock's share price rather than overall market value. Nvidia put itself in a better position to join the index in May when it announced a 10-for-1 stock split. Although the market capitalization was not affected, the price of each stock fell by 90%, allowing the company to become part of the Dow without too much weighting.

The move is the first change to the index since February Amazon replaced Walgreens Boots Alliance. Over the years, the Dow has caught up and gained exposure to the biggest tech companies. The stocks in the index are selected by a committee of S&P Dow Jones Indices.

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