GPU (graphics processing unit) maker Nvidia is set to replace chipmaker Intel in the Dow Jones Industrial Average, a change that evidently points out the rapid rise of artificial intelligence (AI) and marks a pivotal moment in the semiconductor sector.
The switch will take effect on November 8, 2024, alongside Sherwin Williams taking the place of Dow Inc., according to S&P Dow Jones Indices.
Following a strong financial performance on the back of the AI boom, Nvidia’s shares have skyrocketed more than 170% in 2024, adding to a 240% surge last year, which has propelled its market capitalization to an impressive $3.3 trillion, second only to Apple.
The growth is fueled by heightened demand for its graphics processing units (GPUs), particularly from tech giants such as Microsoft, Google, and Amazon, among others.
Such companies are spending billions to integrate the technologies into their AI infrastructures. Nvidia’s revenues have more than doubled for five consecutive quarters, with the company reporting “insane” demand for its forthcoming AI GPU, Blackwell.
Conversely, Intel has seen its shares plummet over 50% this year as the company struggles to maintain market share against competitors like Advanced Micro Devices (AMD). The company has recently made workforce reductions and cut 16,500 jobs to streamline operations.
With the addition of Nvidia to the Dow Jones Industrial Average, four of the six trillion-dollar tech companies are now represented in the Dow, while Alphabet and Meta remain excluded.
Nvidia’s entry comes after a strategic 10-for-1 stock split that was particularly aimed at positioning the company for inclusion in the index without disproportionately affecting its weighting.
The inclusion of Nvidia also marks the first modification to the Dow since February, when Amazon replaced Walgreens Boots Alliance in yet another display of the index making space for technology-heavy companies.
