In a significant development for the chipmaking industry, Nvidia Corp. is set to replace Intel Corp. on the Dow Jones Industrial Average index. The announcement was made by S&P Dow Jones Indices on Friday, along with the inclusion of paint-maker Sherwin-Williams Co. on the index, replacing Dow Inc.
Intel’s removal from the Dow Jones Industrial Average index marks the end of its 25-year run, highlighting the company’s declining market position. This change comes as Intel’s shares have plummeted by 54% this year, making it the worst performer on the index. Additionally, Intel’s stock price is currently the lowest among the price-weighted Dow components.
The loss of Dow Jones inclusion is seen as another reputational blow for Intel, as it grapples with a challenging transformation and loss of confidence. Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented on the potential impact on Intel’s reputation.
Intel’s struggles can be attributed to its loss of manufacturing edge to rival Taiwan Semiconductor Manufacturing Co. and missing out on the lucrative artificial intelligence boom. Despite expressing optimism about its future, Intel’s recent third-quarter earnings report revealed a loss of 46 cents per share, falling short of analyst estimates. The company’s market share and profitability challenges have led to a cautious outlook from analysts.
On the other hand, Nvidia has emerged as a key player in the global semiconductor industry, with its chips playing an essential role in powering generative AI technologies. The company’s shares have surged more than two-fold this year alone, solidifying its position in the market.