AI chipmaker Nvidia to join Dow Jones, replacing rival Intel

The artificial intelligence leader Nvidia is set to replace Intel in the Dow Jones Industrial Average (DJIA), as announced in a press release by S&P Global on 1 November.

This adjustment, taking effect before trading opens on 8 November, will also see Dow Inc. replaced by The Sherwin-Williams Co. in the index.

The DJIA, the oldest stock index in the world and one of Wall Street's three major benchmarks, stated that the update aims to ensure "a more representative exposure to the semiconductors industry and the materials sector, respectively".

The Dow Jones Industrial Average tracks 30 large publicly traded companies across various sectors. Unlike indices weighted by market capitalisation, such as the S&P 500, the DJIA is price-weighted, meaning companies with higher stock prices have a greater influence, regardless of their overall market value.

Nvidia's recent 10-for-1 stock split, aimed at increasing accessibility for investors, has also facilitated its inclusion by reducing its influence on the index's movements.

The addition of Nvidia to the Dow is a notable milestone, suggesting a more stable outlook for the company in its continued rise. The DJIA often includes blue-chip firms that are well-established, financially stable, and significant players within their industries, which aligns with Nvidia’s profile. Nevertheless, the inclusion may not lead to a substantial buying surge, as most passive investment funds focus on broader indices, like the S&P 500.

Meanwhile, Intel, one of the world's most renowned technology companies, providing central processing units (CPUs) for personal computers, has been facing growth challenges. Lagging behind competitors such as Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing Co.