Tech Shake-Up: NVIDIA Supplants Intel In The Dow Jones Industrial Average

After being on the Dow Jones Industrial Average for 25 years, Intel is being replaced by tech rival NVIDIA. The news of Intel being removed from the Dow comes in the same week the tech bellwether reported a $16.6 billion dollar loss in the third quarter of 2024.

In a press release, the S&P Dow Jones Indices remarked the index changes were initiated in order to ensure a “more representative exposure to the semiconductors industry and the materials sector respectively.” NVIDIA will join Sherwin-Williams, which will replace Dow Inc, and Vista Corp., which will replace AES Corp., on the Dow prior to the open of trading on Friday, November 8.

The continued boon in AI has played a large role in NVIDIA’s recent success, with its data center GPUs leading the way. One example is the use of one-hundred-thousand Hopper H100 GPUs in xAI’s Colossus system in Memphis, Tennessee. Other notable companies buying up massive quantities of data center GPUs are Microsoft, Meta, Google, and Amazon. On the consumer side of things, the company is preparing to release its newest lineup of RTX 5000 series GPUs as well, which are expected to arrive early next year.

NVIDIA shares have climbed an astronomical 170% in 2024, following a 240% leap in 2023. The company’s market cap has also risen to $3.3 trillion, second only to Apple among publicly traded companies. In comparison, Intel’s shares have dropped approximately 54% this year. Intel’s stock fell about 1% following the Dow news, while NVIDIA’s was up around 1.5%.

Another move by NVIDIA that factored into its entrance into the index was when the company's 10-for-1 stock split in May. While the move did not affect to the company’s market cap, it did cut the price of each share by 90%, making it easier to join the index without having too heavy a weighting.

As for what all this means for Intel, Susannah Streeter, head of money and markets at Hargreaves Lansdown, remarked, “Losing the status of Dow Jones inclusion would be another reputational blow for Intel, as it grapples with a painful transformation and loss of confidence.” Lansdown continued, “It would also mean that Intel is not included in exchange-traded funds (ETFs) which track the index, which could impact the share price further.”

While the news of being replaced on the Dow by NVIDIA may not bode well in the near term for Intel, the company is working on righting the ship with its investments in fab expansions, and as CEO Pat Gelsinger recently remarked, becoming a “leaner, faster, and more agile company.” Intel also recently forged an alliance with AMD in a new X86 Advisory Group that intends to “focus on identifying new ways to expand the x86 ecosystem.”