Intel to Be Replaced by Nvidia in the Dow, Underscoring the Downfall of an Industry Titan

Nvidia Corp. is set to replace Intel Corp. in the Dow Jones Industrial Average, marking a significant shift in the technology landscape and highlighting Intel’s declining influence. Intel joined the Dow 25 years ago, but its once-dominant position in the semiconductor sector has diminished as it failed to adapt to evolving industry trends. While many chip stocks have recently hit record highs, Intel’s peak dates back to 2000, and its current share price is 69% below that historic high.

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This year has underscored Intel’s struggles, with the company incurring nearly $19 billion in restructuring costs in the latest quarter as it attempts to regain stability. One of Intel’s major challenges is its delayed response to the artificial intelligence (AI) boom. Management recently admitted that Intel would fall short of its already modest $500 million annual revenue forecast for its Gaudi AI line, falling behind as other companies in the AI sector post substantial gains.

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Meanwhile, Nvidia has emerged as a leader in AI, with its stock skyrocketing approximately 850% over the past two years, driven by strong growth in data-center revenues. Nvidia’s graphics processing units (GPUs) play a critical role in supporting AI applications, propelling the company into the spotlight as a top AI play.

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This divergence in performance was part of the reason MarketWatch columnist Therese Poletti advocated for the Dow’s replacement of Intel with Nvidia back in August. Nvidia’s stock has surged 220% so far this year, while Intel’s has dropped 38%. Following the announcement, Nvidia’s stock rose 2% in Friday’s after-hours trading, while Intel’s declined by about 2%.

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The Dow has struggled to keep up with the S&P 500 this year, with the Dow gaining nearly 12% versus the S&P 500’s 20% rise. Historically, adding a “hot” stock to an index can be risky. For example, Intel was highly favored in the 1990s but has since lost about 39% of its value since being added to the Dow in 1999. Similarly, the S&P 500 added Super Micro Computer Inc. earlier this year following significant gains, only for those gains to erode amid questions about the company’s accounting practices and pressures on its profit margins.

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In addition to the Intel-Nvidia swap, the Dow is making other adjustments to better represent its sectors. Sherwin-Williams Co., a paint and coatings producer, will replace chemicals manufacturer Dow Inc. Both changes will take effect before the market opens on November 8.

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According to announcement by S&P Dow Jones Indices, these adjustments were intended to provide the index with a more accurate representation of the semiconductor and materials industries. Earlier in the year, the Dow added Amazon.com Inc., removing Walgreens Boots Alliance Inc. to capture “the evolving nature of the American economy.”

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The Dow is a price-weighted index, meaning stocks with lower prices have less impact on its performance. Intel, priced at $23.20 per share as of Friday’s close, held the lowest price in the Dow, which limited its influence on the index. Similarly, Dow Inc., which closed at $48.97, had the smallest market capitalization among Dow components. Once Dow Inc. is removed, Travelers Cos. Inc. will be the Dow’s smallest member by market cap at $56 billion. Meanwhile, Verizon Communications Inc., closing at $41.36, will hold the lowest share price in the Dow.

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In another move, S&P Dow Jones Indices will add Vistra Corp. to the Dow Jones Utility Average. This addition is intended to enhance representation of independent power and renewable electricity producers. AES Corp., currently part of the Utility Average, will be removed. Vistra’s stock has been one of the strongest performers in the S&P 500 this year, up by 210%.

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This series of changes illustrates the Dow’s effort to stay aligned with shifting market dynamics and emerging sectors, reflecting both the evolution of the tech industry and a push toward renewable energy.

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