Nvidia To Replace Intel On Dow Jones Industrial Average

Nvidia is to replace Intel on the Dow Jones Industrial Average on Thursday, ending a run of 25 years as Intel deals with ongoing setbacks including difficulties breaking into the surging market for artificial intelligence (AI) chips that Nvidia dominates.

Paint maker Sherwin-Williams will also replace chemical company Dow on the 30-stock index.

S&P Dow Jones Indices said the changes were intended to “ensure a more representative exposure to the semiconductors industry and the materials sector”.

Because the Dow is price-weighted, “persistently lower priced stocks have a minimal impact”, the company said.

AI focus

Stock price is a key element for inclusion in the Dow, unlike the S&P 500 index, which takes into account market value.

Intel’s stock price has declined more than 50 percent this year amidst difficulties in executing a turnaround plan and limited exposure to the AI market that has been a focus of interest for many investors.

The company said in August it would suspend its dividend and cut 15 percent of its staff to help fund turnaround plans.

Last week the company reported third-quarter revenues of $13.3 billion (£10.2bn), down 6 percent from the same period a year earlier.

The company’s revenues in 2023 were $54bn, down nearly one-third from 2021 when Pat Gelsinger took over as chief executive.

The firm is expected to make its first annual net loss this year since 1986.

Investor gloom

Microsoft and Intel were the first two Nasdaq-listed tech companies to join the Dow in the midst of the late-90s dot-com boom.

Microsoft is currently the US’ third most valuable company after Apple and Nvidia.

Nvidia’s share price has risen more than 185 percent this year and more than seven-fold in the past two years.

Its market value has surged past the $3tn mark to $3.39tn, putting it neck-in-neck with Apple for the second most valuable US listed company.

Nvidia’s shares rose about 2 percent on Monday following the news, while Intel’s shares dropped more than 2 percent.