Nvidia (NVDA) stock rises: replaces Intel in Dow Jones Industrial Average amid AI boom

TLDR:

Nvidia to replace Intel in Dow Jones Industrial Average starting Nov. 8 Nvidia stock rises 2.4% on announcement, Intel falls 2.3% Nvidia is the second-largest company in the U.S. with a market capitalization of $3.3 trillion Key Technologies Companies predict increased AI infrastructure spending: $222 billion in 2024, $267 in 2025 B Nvidia stock is up 833% since the beginning of last year, nearing all-time highs

On November 8, NVIDIA will replace Intel in the Dow Jones Industrial Average, ending Intel’s long standing in the prestigious index. The change comes as Nvidia’s market value soared to $3.3 trillion, making it the second-largest company in the U.S. behind Apple.

In early market reaction to the announcement, Nvidia stock rose 2.4%, while Intel stock fell 2.3%. The change underscores NVIDIA’s dominant position in the artificial intelligence chip market, an area that has driven the company’s extraordinary growth.

The Dow Jones inclusion follows Nvidia’s strategic 10-for-1 stock split in June, which made the stock more accessible to individual investors and better suited to the price-weighted Dow index. It became something. Market participants have been predicting this move for several months.

Nvidia’s strong performance is reflected in its stock price, which has soared more than 830% since the beginning of 2023. The company’s stock has recently traded near $138.90 in pre-market trading, close to its all-time high reached in late October.

The company’s growth trajectory is consistent with increased spending on AI infrastructure by major technology companies. Industry analysts at the UBS Global Wealth Management Project predict that combined capital spending in the tech sector will rise 50% to $222 billion in 2024, and another 20% to $267 billion in 2025. It is estimated that this will be reached.

Microsoft has already committed to $20 billion in capital spending on cloud and AI investments, with further increases planned. Similarly, Alphabet reported $13 billion in capital expenditures in its most recent quarter, indicating significant future investments in AI infrastructure.

Amazon announced plans to invest about $75 billion this year, primarily in cloud computing and AI capabilities. The company plans to announce 100 new cloud infrastructure and AI capabilities at the upcoming AWS re:Invent event.

The semiconductor industry landscape continues to evolve, and other chip manufacturers also have mixed performance in the market. Advanced Micro Devices and Broadcom rose modestly by 0.2% in premarket trading after the Dow Jones announcement.

S&P Dow Jones Indices explained that the changes were necessary to ensure more representative exposure to the semiconductor industry. While fewer funds track the Dow compared to the S&P 500, its inclusion may not result in significant additional purchases of Nvidia stock, but it does reflect the company’s emergence as a leading U.S. semiconductor stock. It symbolizes.

Nvidia’s fiscal 2025 third-quarter earnings report, scheduled for November 20, is highly anticipated on Wall Street as an indicator of AI adoption trends. This report provides insight into whether the company can maintain its growth momentum.

The Dow Jones reorganization includes other changes, with Sherwin-Williams replacing Dow and Vistra taking over AES’s place in the Dow Jones utility average. Additionally, Chewy will replace Stericycle in the S&P Midcap 400.

Changes in these indexes reflect broader changes in market capitalization and sector importance, with technology and AI-focused companies gaining prominence on major market benchmarks.

Competitive dynamics in the semiconductor industry continue to evolve, and Intel’s removal from the Dow marks a symbolic shift in leadership in the sector. However, despite this index adjustment, Intel still remains a significant player in the chip market.

Nvidia’s rise came amid strong quarters for several AI companies, and helped push the Nasdaq Composite to a new all-time high. Sustained demand for AI infrastructure suggests the potential for continued growth in this field.

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