Intel Corporation (INTC) has faced a challenging period in recent years, with its stock lagging behind both the technology sector and major stock market indices. This underperformance has extended to the past quarter-century since Intel joined the prestigious Dow Jones Industrial Average.
Back in November 1999, Intel, alongside Microsoft (MSFT), made history as the first Nasdaq-listed stocks to be included in the Dow Jones. This landmark move, which also saw Home Depot and AT&T join the index, replaced companies like Goodyear Tire, Sears Holdings, Chevron, and Union Carbide. While AT&T has since been removed, the other three newcomers have remained, with Home Depot and Microsoft achieving substantial growth.
However, Intel’s story has been different. On November 1, 1999, Intel’s stock traded at a split-adjusted $21.58. Today, it sits at $20.54, indicating a meager 4.8% decline since joining the Dow. In stark contrast, the SPDR Dow Jones Industrial Average ETF (DIA) has surged by 283% over the same period.
Intel’s struggles have continued into 2024, with the stock experiencing a year-to-date decline of over 50% and a year-over-year drop of 38%. This performance has led some financial experts to advocate for replacing Intel with NVIDIA Corporation, a high-growth chipmaker, in the Dow Jones.
The Dow Jones Industrial Average periodically revises its 30 components, with the most recent change seeing Amazon.com Inc. replace Walgreens Boots Alliance. Historically, inclusion in major indices like the Dow often triggers a surge in stock prices. While some companies may experience modest returns upon inclusion, Intel’s nearly 25-year underperformance is exceptional. This has fueled calls for its replacement, highlighting the evolving landscape of the tech industry and the importance of long-term growth potential.
