Nvidia is replacing Intel in this 128-year-old Index

Chipmaker Nvidia is joining the prestigious Dow Jones Industrial Average ( DJIA ), the oldest of Wall Street's three main stock market indexes. This marks a significant shift for the index and reflects the growing importance of AI technology.

The Santa Clara, California-based company will replace Intel in the 128-year-old DJIA Index, starting on November 8. This move comes after Nvidia's stock performance, surging 900% in the past two years, fueled by the AI revolution. Notably, the DJIA was the only major US index that didn't previously include Nvidia.

Scott Colyer , CEO of Advisors Asset Management told Bloomberg, “Nvidia is a well-run company and joining the Dow demonstrates just how powerful its rally has been in recent years after it was at the right place at the right time when no one else was.”

With a market value of $3.32 trillion, Nvidia now sits just behind Apple for the title of the world's most valuable company. The recent stock split has made Nvidia shares more accessible, potentially paving the way for them to surpass Apple in market value.

Intel Out
Meanwhile, Intel, once a dominant force in computer processors, is being removed from the DJIA. The company has faced challenges in recent years, leading to spending cuts, job reductions, and suspended investor payouts. Their stock price has fallen significantly, reflecting these struggles.

"Intel has fallen behind," said Adam Sarhan, founder of 50 Park Investments. "The Dow needs to keep pace with the current market, and Intel no longer represents the strongest companies out there."

What the change means for Dow Jones
This reshuffle is part of an ongoing effort to modernize the DJIA. The index, which began with 12 industrial stocks, has expanded to 30 companies across various sectors like technology, finance, and healthcare. However, it has faced criticism for being narrower than other major indexes like the S&P 500 and lacking representation from the tech giants driving market growth.

The selection process for the DJIA prioritizes price over market value, which previously excluded expensive tech stocks like Nvidia before its recent stock splits. This change paves the way for a more comprehensive picture of the American economy in the DJIA.