Nvidia Corp. NVDA is poised to replace Intel Corp. INTC on the Dow Jones Industrial Average index.
What Happened: On Friday, S&P Dow Jones Indices announced that Nvidia, along with paint-maker Sherwin-Williams Co. SHW, will join the index next week.
Intel will be replaced by Nvidia on the Dow Jones Industrial Average index after a 25-year run, while Sherwin-Williams will replace Dow Inc. DOW.
This change highlights the shift in the chipmaking market and is another blow for Intel, which has seen a decline in its market position.
Intel’s shares have dropped 54% this year, making it the worst performer on the index and leaving it with the lowest stock price on the price-weighted Dow.
“Losing the status of Dow Jones inclusion would be another reputational blow for Intel, as it grapples with a painful transformation and loss of confidence,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown, reported Reuters.
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Why It Matters: Intel, once a dominant player in the chipmaking industry, has lost its manufacturing edge to rival Taiwan Semiconductor Manufacturing Co. TSM and missed out on the lucrative artificial intelligence boom.
This development comes after Intel expressed optimism about its future, despite warning that it had “a lot of work to do.” Intel’s struggles were evident in its third-quarter earnings report, where it reported a loss of 46 cents per share, missing analyst estimates.
Intel’s struggles with market share and profitability have led to a cautious outlook from analysts. The company also fell short of its revenue targets for its Gaudi AI accelerator program in 2024.
On the other hand, Nvidia has emerged as a cornerstone of the global semiconductor industry, thanks to the essential role its chips play in powering generative AI technologies. The company’s shares have risen more than two-fold this year alone.
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