Nvidia will displace rival chipmaker Intel on the Dow Jones Industrial Average, a move in the blue-chip index that reflects the boom in artificial intelligence and major changes in the semiconductor industry.
The changeover will take place on November 8th. S&P Dow Jones also said in a statement that Sherwin-Williams will replace Dow in its index.
Nvidia stock is up more than 170% so far in 2024 after surging about 240% last year as investors rushed to get a piece of the AI chip maker. Nvidia’s market capitalization has ballooned to $3.3 trillion, making it the second-largest listed company after Apple.
Nvidia stock rose 1% on Friday. Intel shares fell 1% in after-hours trading.
Companies like Microsoft, Meta, Google, and Amazon are purchasing large quantities of Nvidia’s graphics processing units (GPUs), such as the H100, to build clusters of computers for AI work. Nvidia’s revenue has more than doubled in each of the past five quarters, and at least tripled in three of those quarters. The company hints that demand for its next-generation AI GPU, called Blackwell, is “insane.”
With the addition of Nvidia, the index now includes four of the $6 trillion tech companies. Not included in the Dow stocks are Alphabet and Meta.
While Nvidia is soaring, Intel is slumping. Intel, long the dominant maker of PC chips, has lost market share to Advanced Micro Devices and has made little progress in AI. Intel stock has fallen by more than half this year as the company struggles with manufacturing challenges and new competition for central processors.
Intel said in a filing this week that its board of directors’ audit and finance committee has approved cost and capital reduction actions, including cutting 16,500 employees and reducing real estate. The layoffs were originally announced in August.
The Dow Jones Industrial Average has 30 components and is weighted by individual stock prices rather than market capitalization. Nvidia announced a 10-for-1 stock split in May, putting it in a good position to join the index. Although the move had no effect on market capitalization, the move lowered the price of each stock by 90%, allowing the company to become part of the Dow without having too much weight.
The switch marks the first index change since February, when Amazon replaced Walgreens Boots Alliance. For years, the Dow Jones Industrial Average has been playing catch-up to gain exposure to the biggest technology companies. Stocks for inclusion in the index are selected by a committee of S&P Dow Jones Indices.
