Nvidia Takes Intel's Place in Dow After 25 Years

Nvidia is set to replace Intel in the Dow Jones Industrial Average after Intel's 25-year presence in the index. This change reflects a significant shift in the semiconductor industry, as Nvidia has become a crucial player while Intel has struggled to keep up.

Once a leader in chip manufacturing, Intel has lost its competitive edge to rivals like TSMC. The company has also missed out on the recent surge in generative artificial intelligence, notably after choosing not to invest in OpenAI, the creator of ChatGPT. As a result, Intel's stock price has plummeted by 54% this year, marking it as the poorest performer on the Dow and leaving it with the lowest price among its index peers at $22.79.

This development follows Intel's optimistic outlook for its PC and server divisions, where it projected revenues for the current quarter to exceed previous estimates. However, the company also acknowledged that it has substantial work ahead to regain momentum.

“Losing its Dow Jones status is not only a loss in market presence but also a reputational blow for Intel,” stated Susannah Streeter, an expert at Hargreaves Lansdown. She added that exclusion from ETFs tracking the Dow could further impact Intel's share price.

Founded in 1968, Intel originally made memory chips before becoming a key player in processors that powered the personal computer boom. Its famous "Intel Inside" marketing transformed ordinary components into premium products during the 1990s, establishing a strong brand presence in laptops and PCs. Yet, during the last few years, Intel's revenue shrank to $54 billion in 2023, a significant decline from 2021 levels, and analysts predict an annual net loss for the first time since 1986. The company's market value has fallen below $100 billion, a milestone not seen in three decades.

In contrast, Nvidia, with a market valuation of $3.32 trillion, is now the world’s second-most valuable company. The company has seen its shares skyrocket due to the growing demand for chips used in generative AI technologies, resulting in a more than two-fold increase in share price this year alone. Over the past two years, Nvidia's stock has surged seven-fold, establishing it as a leader in the semiconductor sector.

Nvidia's Dominance in AI

Nvidia's ascendancy can be largely attributed to its crucial role in powering AI technologies. Initially popular among gamers, the company's graphics processing units (GPUs) are now indispensable in data centers supporting AI applications. This remarkable transformation has made Nvidia a market barometer for AI.

The company's recent 10-for-1 stock split has also facilitated its entry into the Dow, making its shares more accessible to individual investors.

In stark contrast, Intel has struggled in the AI chip market, which Nvidia dominates. The advanced technology and high demand for Nvidia's chips create a formidable challenge for Intel as it tries to catch up in this dynamic industry.

Nvidia, Intel, Dow