AI chipmaker Nvidia (NVDA) will join the Dow Jones Industrial Average, replacing chipmaker Intel (INTC), S&P Dow Jones Indices, the owner of the 127-year-old index, said late Friday.
Nvidia’s (NVDA) is currently the world’s second-most valuable public company. Its $3.32 trillion market cap lags only Apple’s (AAPL) valuation of $3.39 trillion. Nvidia’s (NVDA) shares are up 174% in 2024 as of the close on November 1. The stock finished that day at $135.40.
Intel shares closed at $23.40 on Friday. The stock is down 53% in 2024.
The switch will be effective before trading opens on Friday, November 8.
The move illustrates why the Dow Jones Industrial Average isn’t a serious index. Since the DJIA is a price-weighted index, the change from Intel (at $23.40) to Nvidia (at $135) means that this position will have roughly four times the weight in the 30 stock index. And then there’s the little matter of the change from a marker laggard to a market leader. If the Dow suddenly starts to outperform, does that tell us anything about the stock market or does it just reflect the effect of replacing Intel with Nvidia?
But the move should provide an added boost–not that the stock needs it–for Nvidia shares. Managers of ETFs that track the Dow, such as the SPDR Dow Jones Industrial Average ETF Trust (DIA) with assets of $32 billion, will have to rebalance their portfolio to add Nvidia. The total assets in Dow ETFs is only slightly above the $32 billion in the DIA ETF so the effect o
Intel had to be replaced, no one is certain if intel will even be in business in the next 5 years. Especially if fiscal responsibility, aka the government living within its means is restored. The DOW was/is a measure of how leading companies are doing. Intel is not a leading company at this time. I also wonder if Boeing still is?