Nvidia Joins the Dow, Intel Exits

In a significant move for tech investors, Nvidia (NVDA) saw its stock rise nearly 3% in after-hours trading on Friday, following exciting news about its position in the stock market. The S&P Dow Jones Indices announced that Nvidia, a leader in artificial intelligence (AI) chips, will replace Intel (INTC) in the prestigious Dow Jones Industrial Average (commonly referred to as the "Dow").

This announcement marks a notable shift, as Nvidia's stock climbed by 2.9% post-market, while Intel's shares dropped by 1.9%.

Nvidia's Upcoming Inclusion in the Dow

Nvidia is set to officially join the Dow Jones Industrial Average before the market opens on Friday, November 8. Intel, which has been a part of the Dow since 1999 during the height of its success in the tech boom, will be leaving the index.

Reasons for the Change

The decision to replace Intel with Nvidia is aimed at providing a more accurate representation of the semiconductor industry. As stated in S&P Dow Jones Indices' press release, this change reflects the current landscape of technology.

With a market capitalization of approximately $3.39 trillion, Nvidia is now the second-largest stock traded on a U.S. exchange, just behind Apple. In stark contrast, Intel's market cap stands at about $99 billion, making it significantly smaller than Nvidia.

Nvidia's role in the tech industry is also highlighted by its pivotal position in developing chips and technology essential for AI applications, making it more relevant compared to Intel in today's market.

The Dow Jones Industrial Average consists of 30 large-cap stocks that aim to mirror the overall U.S. stock market, and thus, the U.S. economy. Historically, it began with industrial and energy companies but has increasingly included technology firms, reflecting their growing importance in the market. Major tech players like Amazon, Apple, and Microsoft are already included in this index.

Nvidia's 10-for-1 Stock Split Impact

A key factor that facilitated Nvidia's entry into the Dow was its 10-for-1 stock split that took place in June. Since the Dow is a price-weighted index, stocks with higher prices have more influence on its movement. Before the split, Nvidia’s shares were priced at around $1,353. The split allowed its shares to close at a more manageable price of $135.37, enabling it to be considered for Dow inclusion.

Benefits of Joining the Dow for Nvidia

Being included in the Dow means that mutual funds and exchange-traded funds (ETFs) that track this index will be required to purchase shares of Nvidia. This inclusion is expected to increase demand for Nvidia's stock, potentially driving its price higher.

Investors can anticipate continued positive developments, as Nvidia is scheduled to report its quarterly results for the period ending October 27 on Wednesday, November 20.

Nvidia, Intel, Dow