AI boost: Nvidia to dethrone Intel from Dow Jones Industrial Average after 25 years

Nvidia is set to replace Intel on the Dow Jones Industrial Average, ending Intel’s 25-year presence on the blue-chip index. This highlights the evolving landscape of the semiconductor industry and represents another challenge for Intel. 

Nvidia will join the index next week, alongside Sherwin-Williams, which is also being added, according to S&P Dow Jones Indices. 

In recent years, Intel has lost its manufacturing lead to competitors like TSMC and has missed opportunities in the generative AI sector, notably by not investing in OpenAI, the parent company of ChatGPT, as reported by Reuters. 

Intel’s stock has plummeted 54% this year, making it the worst performer on the index and leaving it with the lowest stock price in the price-weighted Dow, the report added. 

Founded in 1968, Intel began as a memory chip manufacturer before pivoting to processors that played a key role in the rise of the personal computer industry. The iconic ‘Intel Inside’ stickers transformed basic electronic components into sought-after products, becoming a common sight on laptops. 

In 2023, Intel reported revenues of $54 billion, a decline of nearly one-third from 2021, the year Pat Gelsinger became CEO. Analysts predict that the company will post its first annual net loss since 1986. 

For the first time in three decades, Intel’s market value has dropped below $100 billion, which is dwarfed by Nvidia’s $3.32 trillion valuation making it the world’s second-most valuable company. 

Nvidia’s rise is largely attributed to an unrelenting demand for its AI chips, essential to the growing field of artificial intelligence. This achievement marks a significant milestone for Nvidia, a company originally known for its gaming processors. The stock has climbed around 18% in October, fuelled in part by OpenAI’s recent $6.6 billion funding round and continuing AI-driven investments. 

The past year has seen Nvidia’s share price skyrocket by nearly 190%, thanks to AI’s continued momentum and Nvidia’s dominating role in the market. Demand for data center chips also got a boost on Friday after Western Digital posted stronger-than-expected quarterly profits, underscoring optimism in the AI sector. 

In June, Nvidia briefly became the world’s most valuable company before it was overtaken by Microsoft and Apple. The trio’s market valuations have been neck-and-neck for several months. 

Nvidia is the dominant supplier of processors used in AI computing, and the company has become the biggest winner in a race between Microsoft, Alphabet, Meta Platforms and other heavyweights to dominate the emerging technology. 

Nvidia’s success is a boost not only for the tech sector but for the entire US stock market, as the combined influence of Nvidia, Apple and Microsoft accounts for nearly 20 percent of the S&P 500’s value.