CEO of Nvidia, Jensen Huang, speaks during the launch of the supercomputer Gefion, where the new AI supercomputer has been established in collaboration with EIFO and NVIDIA at Vilhelm Lauritzen Terminal in Kastrup, Denmark October 23, 2024.
Ritzau Scanpix | Mads Claus Rasmussen | Via Reuters
Nvidia is replacing Intel on the Dow Jones Industrial Average, a shakeup to the blue-chip index that replaces a flagging semiconductor company with the primary vendor of GPUs for AI.
Intel shares were down 1% in extended trading on Friday. Nvidia shares rose 1%.
The switch will take place on Nov. 8. In a separate move, Sherwin Williams will replace Dow Inc in the average as well, S&P Dow Jones Indices said in a statement.
Shares of Nvidia have climbed over 180% so far in 2024 as investors have seen the company as the primary beneficiary of the AI boom. The fast rise of Nvidia on the back of its data center AI processors has led it to be one of only a handful of companies with a market cap over $3 trillion, alongside Microsoft and Apple, both of which are already included in the DJIA.
On the other hand, Intel shares have fallen 51% so far this year as the company struggles with manufacturing challenges, new competition for its central processors, and the impression that it has missed out on the AI trend.
The Dow contains 30 components and is weighted by the share price of the individual stocks instead of the companies total market value. Nvidia put itself in better position in May, when the company announced a 10-for-1 stock split. While doing nothing to its market cap, the move slashed the price of each share by 90%, allowing it to become a part of the Dow without having too heavy a weighting.
The switch is the first change to the index since February, when Amazon replaced Walgreens Boots Alliance. Over the years, the industrial-heavy Dow has been playing catch up and gaining exposure to the largest technology companies. The stocks in the DJIA are chosen by a committee from S&P Dow Jones Indices.
With the addition of Nvidia, four of the six trillion-dollar tech companies are now in the index. The two not in the index are Alphabet and Meta.
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