In a significant development for the technology industry, Intel Corporation will be replaced by Nvidia in the Dow Jones Industrial Average after a remarkable 25-year tenure, as announced by S&P Dow Jones Indices on Friday. This decision deals another blow to Intel, a struggling chipmaker that was one of the first two technology firms to be included in the prestigious blue-chip index.
Once a dominant force in chipmaking, Intel has faced challenges in recent years, relinquishing its manufacturing edge to rival TSMC and missing out on the transformative artificial intelligence boom. One notable misstep was passing on an investment opportunity in OpenAI, the owner of ChatGPT. As a result, Intel’s shares (INTC) have plummeted by 54% this year, making it the worst-performing stock on the index and leaving it with the lowest stock price among the price-weighted Dow components. Following the announcement, Intel’s stock fell approximately 1% in extended trading, while Nvidia’s shares (NVDA) rose by 1.5%.
Founded in 1968, Intel initially sold memory chips before transitioning to processors that played a pivotal role in launching the personal computer industry. In the 1990s, the iconic “Intel Inside” stickers transformed ordinary electronic components into premium products, eventually becoming ubiquitous on laptops.
On the other hand, Nvidia has emerged as a cornerstone of the global semiconductor industry, owing to the essential role its chips play in powering generative artificial intelligence technologies. This has led to a remarkable seven-fold surge in the company’s shares over the past two years. In fact, Nvidia’s shares have more than doubled in value this year alone. Once primarily popular among gamers seeking PCs equipped with Nvidia’s graphics processors, the company has now become the second-most valuable in the world and is considered a barometer for the AI market. Additionally, Nvidia’s 10-for-one stock split in June has made its soaring shares more accessible to retail traders.