NVIDIA Included in Dow Jones Index... Intel Removed After 25 Years

Inclusion in Dow Jones Index from November 8
Dow Jones calculated based on 30 stocks
Intel's stock halved, excluded after 25 years

NVIDIA, a leader in artificial intelligence (AI) chips, will replace Intel and be included in the Dow Jones Industrial Average.

On the 1st (local time), S&P Dow Jones Indices announced that NVIDIA will officially be included in the Dow Jones Industrial Average (DJIA) starting from the 8th. They explained that this change was made to better represent the semiconductor industry and materials sector. Intel, which joined the Dow in 1999, will be excluded.

NVIDIA's stock price has surged more than 180% this year due to the rapid increase in demand for AI chips. Its market capitalization has grown to $3.3 trillion, making it the second highest among publicly traded companies after Apple. Big tech companies such as Microsoft, Meta, Google, and Amazon have purchased NVIDIA’s GPUs like the H100 in large quantities for AI services, and NVIDIA’s revenue has more than doubled over the past five quarters.

CNBC stated, "NVIDIA’s inclusion in the Dow reflects a dramatic shift in the blue-chip index that mirrors the AI boom and changes in the semiconductor industry."

On the other hand, Intel, which was the dominant player in the central processing unit (CPU) sector, has not adequately responded to the AI boom, resulting in its stock price falling more than 50% this year. Intel is currently undergoing major restructuring, including cutting 16,500 employees and splitting its semiconductor design and manufacturing divisions.

The DJIA is a global stock index calculated based on 30 large-cap stocks (known as "blue chips") listed on the New York Stock Exchange by Dow Jones & Company. It is a representative stock index that indicates trends and prices in the U.S. stock market and is commonly called the Dow. Typically, stocks with high prices have been restricted from inclusion to limit index volatility, but NVIDIA was included after its 10-for-1 stock split in June. In addition to Intel, the chemical company Dow will be removed from the Dow, and paint manufacturer Sherwin-Williams will be added in its place.

The Dow is calculated using an average return method, and many argue that it lacks representativeness compared to the market-cap weighted S&P 500. It only includes 30 large and long-established stocks listed on the exchange, leading to criticism that these stocks do not fully represent the entire market.

The number of tech companies worth $6 trillion included in the Dow has increased to four, including NVIDIA, Apple, Microsoft, and Amazon. Alphabet and Meta are not included in the index. Amazon was added to the Dow in February after excluding the retail company Walgreens Boots Alliance.