In a dramatic development that reflects the evolving tech landscape, Nvidia Corporation (NVDA) has been added to the Dow Jones Industrial Average, replacing the struggling chipmaker Intel Corporation (INTC). This change marks a pivotal moment, underscoring Nvidia’s rapid ascent driven by its leadership in the artificial intelligence (AI) chip market, while Intel continues to face significant challenges.
The announcement was made by S&P Dow Jones Indices on Friday, confirming that Nvidia and Sherwin-Williams Co (SHW) will join the index next week. Intel, after a 25-year presence on the Dow, will make way for Nvidia, while Sherwin-Williams will replace Dow Inc (DOW).
Nvidia’s inclusion is a testament to its extraordinary growth and the soaring demand for its cutting-edge Blackwell AI GPUs. The company’s revenue has doubled over the past five quarters and tripled in the last three, driven by substantial investments from tech giants such as Microsoft, Meta Platforms, Alphabet (Google), and Amazon, all of which are leveraging Nvidia’s powerful H100 GPUs for their ambitious AI projects.
Industry expert Beth Kindig of I/O Fund predicts that Nvidia could achieve a staggering $10 trillion valuation by next year, reflecting the transformative impact of its Blackwell chips on the market.
Conversely, Intel, once the dominant force in PC chip manufacturing, now faces a stark reality. It has lost market share to Advanced Micro Devices (AMD) and has yet to penetrate the burgeoning AI sector. In response to its financial difficulties, Intel’s board has approved significant cost-cutting measures, including laying off 16,500 employees and reducing its real estate holdings, as revealed in August.
The stark contrast in stock performance—Nvidia’s price soaring over 181% year-to-date compared to Intel’s 52% decline—highlights a dramatic shift within the chipmaking industry. This transformation is further reflected in the Dow’s composition, where Nvidia’s entry signifies the increasing importance of AI and the demand for advanced computing capabilities.
Unlike other indices, the Dow’s 30 components are weighted by share price rather than market capitalization. Nvidia strategically prepared for this inclusion by executing a 10-for-1 stock split in May, which lowered its share price without impacting its market cap significantly. This move facilitated Nvidia’s addition to the index, as reported by CNBC.
As Nvidia continues its growth and innovation trajectory, Intel faces the daunting challenge of reclaiming its position in an ever-evolving tech landscape. Nvidia’s entry into the Dow Jones Industrial Average represents a significant power shift, highlighting the rising influence of AI and the companies at the forefront of this technological revolution.
