Nvidia is set to join the Dow Jones Industrial Average (DJIA) on November 8, replacing Intel, a move that highlights Nvidia’s rapid ascent and the diminishing influence of Intel in the tech industry. Over the past two years, Nvidia’s stock has skyrocketed nearly 900%, underscoring the significant investor confidence in companies driving the AI revolution. This transition marks a pivotal moment for the 128-year-old index, which has yet to fully acknowledge Nvidia’s crucial role in the recent tech-driven market rally.
As noted by Scott Colyer, CEO of Advisors Asset Management, “Nvidia is a well-run company, and joining the Dow demonstrates just how powerful its rally has been in recent years, particularly as it was positioned correctly when few others were.” Nvidia’s remarkable growth trajectory is evident in its market capitalization, which reached approximately $3.32 trillion, positioning it as one of the most valuable companies globally, just behind Apple Inc.
In contrast, Intel, which has been part of the DJIA since 1999, has struggled significantly. The company has implemented drastic measures, including spending cuts, layoffs, and a suspension of dividends, in an attempt to turn its fortunes around. Intel’s stock has dropped 54% this year alone, reflecting its struggles in a rapidly evolving market. Market analyst Adam Sarhan remarked, “Intel has lagged in a huge way… The Dow is evolving. You want to see the strongest companies survive today.”
Sherwin-Williams will also join the Dow, replacing Dow Inc., which has been part of the index since 2019. This change illustrates a broader shift in the DJIA’s composition, which has faced criticism for its limited focus compared to the S&P 500 and the tech-heavy Nasdaq. The Dow’s methodology is unique, as it is price-weighted, meaning that stock splits—such as Nvidia’s recent 10-for-1 split—significantly impact its inclusion.
Nvidia’s rise is not only a testament to its innovative hardware and software but also reflects the transformations AI is driving within the broader economy. The company has capitalized on strategic stock splits and a relentless focus on AI technologies, making it well-aligned with the Dow’s criteria for inclusion. This adjustment is only the second in 2024, following Amazon’s replacement of Walgreens Boots Alliance earlier in the year.
While the Dow has seen a decline in influence due to the rise of market-cap-weighted indexes, it still represents a hallmark of corporate prestige. Nvidia’s addition is expected to enhance the tech profile of the Dow, potentially attracting more investor interest in AI-driven growth and solidifying its place in the future of American industry.
Disclaimer: This content is for informational purposes only and should not be construed as financial advice. Please conduct your own research or consult with a financial advisor before making investment decisions.
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