Nvidia to replace Intel on Dow Jones industrial average

Change comes as Intel's 25-year tenure struggles to maintain competitive edge in rapidly evolving chip market

Nvidia will replace Intel on the Dow Jones Industrial Average (DJIA) starting November 8, marking a significant shift in the semiconductor landscape.

This change comes after Intel's 25-year tenure on the index, during which the company has struggled to maintain its competitive edge in the rapidly evolving chip market.

The decision reflects Intel's recent challenges, including a 54% decline in its stock value this year, making it the worst performer on the Dow.

In contrast, Nvidia's shares have surged, benefiting from its pivotal role in the artificial intelligence (AI) boom.

Following the announcement, Nvidia's stock rose 2.2% in after-hours trading, while Intel's fell 1.6%.

Nvidia's rise can be attributed to its dominance in AI technology, with its chips being crucial for powering generative AI applications.

The company has seen a staggering increase in its market value, reaching approximately $3.32 trillion, making it the second-most valuable company globally.

Analysts predict Nvidia's stock could further climb, possibly overtaking Apple in market capitalization soon.

This transition highlights the changing dynamics in the semiconductor industry.

Once a leader in chipmaking, Intel has lost significant ground to competitors like Taiwan Semiconductor Manufacturing Company (TSMC) and has struggled to keep pace with advancements in AI technologies.

Intel's stock has suffered due to a series of strategic missteps, including missing investment opportunities in AI firms such as OpenAI.

Sherwin-Williams will also join the Dow, replacing Dow Inc., as part of this reshuffling.

This move emphasizes a broader trend of updating the index to reflect the companies that are at the forefront of current technological advancements and market relevance.

Intel's declining revenue, down nearly one-third since 2021, coupled with expectations of its first annual net loss since 1986, has raised concerns about the company's future.

The firm's stock price has dropped significantly, now worth less than $100 billion for the first time in three decades.

Experts believe that Intel's removal from the DJIA could further impact its stock price, as it would no longer be included in exchange-traded funds (ETFs) that track the index.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that this development could damage Intel's reputation as it undergoes a painful transformation in response to its declining market position.

In contrast, Nvidia's addition to the DJIA signifies its strong performance and the industry's shift towards AI-driven technologies.

The company, once primarily known for gaming graphics cards, is now viewed as a bellwether for the AI market.

Its stock split earlier this year has made it more accessible to retail investors, further boosting its appeal.

Hence, Nvidia has become the most vlued company globally overtaking even Apple.

Nvidia's ascent is not just a story of corporate success; it represents a broader trend in the tech sector where companies that effectively leverage AI technologies are thriving.

The ongoing competition among tech giants, including Microsoft, Google, and Apple, for dominance in AI further solidifies Nvidia's critical role in the industry.

As Nvidia prepares to join the DJIA, the move encapsulates a pivotal moment in the evolution of technology and highlights the importance of adaptability in the fast-paced semiconductor landscape.