Nvidia is replacing rival chipmaker Intel in the Dow Jones Industrial Average, a shakeup of the blue-chip index that reflects the boom in artificial intelligence and a major shift in the semiconductor industry.
The change will take place on Nov. 8. Sherwin Williams will also replace Dow Inc. in the index, S&P Dow Jones said in a statement.
Shares of Nvidia have risen more than 170% so far in 2024, after surging about 240% last year as investors rushed to get a piece of the AI chipmaker. Nvidia’s market cap has risen to $3.3 trillion, making it the second-largest publicly traded company after Apple.
Shares of Nvidia rose 1% on Friday. Intel shares fell 1% in extended trading.
Companies like Microsoft, Meta, Google and Amazon are buying Nvidia’s graphics processing units (GPUs), like the H100, in bulk to build clusters of computers for their AI work. Nvidia’s revenue has more than doubled in each of the past five quarters, and at least tripled in three of those. The company has said demand for its next-generation AI GPU, called Blackwell, is “insane.”
With the addition of Nvidia, four of the Dow’s six trillion-dollar tech companies are now in the index. The two not in the Dow are Alphabet and Meta.
As Nvidia soars, Intel tumbles. Intel, long the dominant maker of PC chips, has lost market share to Advanced Micro Devices and made little progress in AI. Intel shares have fallen by more than half this year as the company grapples with production issues and new competition for its core processors.
Intel said in a filing this week that the board’s audit and finance committee has approved cost and capital reduction actions, including cutting its workforce by 16,500 employees and shrinking its real estate footprint. The layoffs were originally announced in August.
The Dow is made up of 30 components and is weighted based on the share price of individual stocks rather than total market value. Nvidia put itself in a better position to join the index in May, when it announced a 10-for-1 stock split. While the market cap wasn’t affected, the price of each stock dropped 90%, allowing the company to become part of the Dow without much weighting.
The switch is the first change to the index since February, when Amazon replaced Walgreens Boots Alliance. Over the years, the Dow has been catching up in gaining exposure to the largest technology companies. The stocks in the index are chosen by a committee of S&P Dow Jones Indices.