TLDR:
- Nvidia to replace Intel in Dow Jones Industrial Average from Nov 8
- Nvidia stock rose 2.4% on announcement while Intel fell 2.3%
- Nvidia is second-largest US company by market value at $3.3 trillion
- Major tech companies forecast increased AI infrastructure spending: $222B in 2024, $267B in 2025
- Nvidia stock up 833% since early last year, approaching all-time high
Nvidia will replace Intel in the Dow Jones Industrial Average on November 8, marking the end of Intel’s long tenure in the prestigious index. The change comes as Nvidia’s market value has soared to $3.3 trillion, making it the second-largest U.S. company behind Apple.
Early market reaction saw Nvidia’s stock climb 2.4% following the announcement, while Intel shares declined 2.3%. The replacement underscores Nvidia’s dominant position in the artificial intelligence chip market, a sector that has driven the company’s extraordinary growth.
The inclusion in the Dow Jones follows Nvidia’s strategic 10-for-1 stock split in June, which made the stock more accessible to retail investors and better suited for the price-weighted Dow index. The move had been anticipated by market observers for several months.
Nvidia’s stellar performance is reflected in its stock price, which has surged more than 830% since early 2023. The company’s shares recently traded near $138.90 in premarket activity, approaching their all-time high achieved in late October.
The company’s growth trajectory aligns with increased spending on AI infrastructure by major technology companies. Industry analysts at UBS Global Wealth Management project combined tech sector capital expenditure to reach $222 billion in 2024, representing a 50% increase, followed by another 20% rise to $267 billion in 2025.
Microsoft has already committed $20 billion in capital expenditure for cloud and AI-related investments, with plans for further increases. Similarly, Alphabet reported $13 billion in capital spending during the recent quarter, indicating substantial future investments in AI infrastructure.
Amazon has announced plans to invest approximately $75 billion this year, largely directed toward cloud computing and AI capabilities. The company is set to unveil 100 new cloud infrastructure and AI features at its upcoming AWS re:Invent event.
The semiconductor industry’s landscape continues to evolve, with other chip manufacturers showing mixed market performance. Advanced Micro Devices and Broadcom saw modest gains of 0.2% in premarket trading following the Dow Jones announcement.
S&P Dow Jones Indices explained the change as necessary to ensure more representative exposure to the semiconductor industry. While the inclusion in the Dow may not drive significant additional buying of Nvidia stock, as fewer funds track the Dow compared to the S&P 500, it symbolizes the company’s emergence as the leading U.S. chip stock.
Nvidia’s upcoming fiscal 2025 third-quarter results, scheduled for November 20, are highly anticipated by Wall Street as an indicator of AI adoption trends. The report will provide insights into whether the company can maintain its growth momentum.
The reshuffling of the Dow Jones also includes other changes, with Sherwin-Williams replacing Dow Inc., and Vistra Corp. taking AES Corp.’s position in the Dow Jones Utility Average. Additionally, Chewy will replace Stericycle in the S&P MidCap 400.
These index changes reflect broader shifts in market capitalization and sector importance, with technology and AI-focused companies gaining prominence in major market benchmarks.
The semiconductor industry’s competitive dynamics continue to evolve, with Intel’s removal from the Dow marking a symbolic shift in the sector’s leadership. However, Intel remains a significant player in the chip market despite this index adjustment.
Nvidia’s ascension comes amid robust quarters from several AI-related companies, contributing to the Nasdaq Composite reaching new record highs. The sustained demand for AI infrastructure suggests continued growth potential in the sector.
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