Nvidia Corp is replacing Intel Corp on the Dow Jones Industrial Average, ending a 25-year-run for a pioneering semiconductor company that has fallen behind as Nvidia cornered the market for chips that run artificial intelligence (AI) systems.
Paintmaker Sherwin-Williams Co is also to replace chemical company Dow Inc among the companies that make up the 30-stock average.
The changes that take effect on Thursday “were initiated to ensure a more representative exposure to the semiconductors industry and the materials sector respectively,” S&P Dow Jones Indices LLC said on Friday.
Photo: Reuters
As the Dow Jones Industrial Average is price-weighted, “persistently lower priced stocks have a minimal impact,” it added.
Dow Inc — a major producer of chemicals and plastics, and unrelated to the similarly named company behind the index — has also been the smallest company on the Dow Jones Industrial Average in terms of market capitalization.
Intel’s share price has dropped 54 percent so far this year to US$23.20, making the company the worst performer on the index. The California chipmaker on Thursday reported third-quarter revenue of US$13.3 billion, down 6 percent from the same period last year.
The company is “acting with urgency” on a plan to reduce costs and simplify its portfolio, Intel chief executive officer Pat Gelsinger said at the time.
Analysts expect Intel to report its first annual net loss this year since 1986.
“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,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“It would also mean that Intel is not included in exchange-traded funds which track the index, which could impact the share price further,” she added.
By contrast, Nvidia’s shares have risen more than 173 percent this year to US$135.40. The company is sitting at a US$3.32 trillion valuation, making it the world’s second-most valuable company.
Unlike Intel, Nvidia designs, but does not manufacture its own chips, relying heavily on Taiwan Semiconductor Manufacturing Co (台積電), an Intel rival.
The company has emerged as a cornerstone of the global semiconductor industry, thanks to the essential role its chips play in powering generative AI technologies.
Additional reporting by Reuters
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