Nvidia Takes Intel's Place in Dow Index After 25-Year Reign

Nvidia has officially replaced Intel in the Dow Jones Industrial Average, ending Intel's 25-year presence in the blue-chip index. This transition is a significant move for both companies and reflects the changing landscape of the technology sector.

Once a leader in chip manufacturing, Intel has struggled recently to keep pace with competitors like TSMC. The company missed out on major advancements in generative artificial intelligence, a growing market that has boosted Nvidia’s prominence. Intel’s decision to pass on investing in OpenAI, the creator of ChatGPT, is often cited as a key misstep.

In 2023, Intel has faced significant challenges as its shares dropped by 54%, making it the worst performer on the Dow. On Friday, Intel's stock fell to $22.79, while Nvidia's shares surged to $139.17, up more than 2% in extended trading.

Despite expressing optimism about future revenues in their PC and server divisions, Intel acknowledges they still have much work ahead. According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, losing its Dow status adds to Intel's struggles with reputation and confidence in the market. This change could also affect Intel's stock price further since it will no longer be included in exchange-traded funds (ETFs) tracking the index.

Founded in 1968, Intel was a pioneer in selling memory chips before transitioning to the central processing units (CPUs) that powered the rise of personal computers. In the 1990s, the iconic “Intel Inside” stickers transformed it into a renowned brand among consumers.

However, in recent years, their revenue has seen a downturn, dropping to $54 billion, nearly one-third less than their 2021 figures. Analysts predict 2023 might mark Intel’s first annual net loss since 1986, with its market value falling below $100 billion for the first time in three decades.

Nvidia's Rise in the AI Market

In contrast, Nvidia has emerged as a key player in the semiconductor industry, especially in the field of generative AI. The demand for its chips has been driven by the rapid growth of AI technologies, leading to an impressive seven-fold increase in its stock price over the last two years.

Nvidia’s shares have more than doubled this year, reflecting its strong market position. Once primarily known for catering to gamers, Nvidia has now become a major indicator of the AI sector's health. The company’s 10-for-one stock split in June made its shares more accessible to a wider range of investors.

Intel, however, faces challenges in penetrating the AI chip market largely dominated by Nvidia, where the latter's technologies are difficult to replicate and costly to replace in AI data centers.

Nvidia, Intel, Dow