Nvidia will take the place of Intel in a Dow Jones Industrial Average after 25 years of presence, which highlights the change in the market chip production and marking another setback for the struggling semiconductor company. Nvidia will join the blue-chip index next week, it reports Reuters, along with paint maker Sherwin-Williams, which will replace Dow, S&P Dow said in a note last night.
Intel, once the dominant force in chip manufacturing, has ceded its manufacturing lead to rivals in recent years Tsmc e the artificial intelligence boom was missed generative due to some missteps, including the Gives Up on Investing in OpenAI, owner of ChatGPT. This year the Intel shares fell 54%, making the company the worst performer in the index and with the lowest share price in the price-weighted Dow Jones. Yesterday, Intel shares fell 1,6%, while Nvidia shares rose 2,2%.
It didn’t help that Intel itself expressed optimism about the future of its PC and server businesses, forecasting revenues for the current quarter to be higher than expected, but warning that it had “a lot of work to do.”
“Losing its Dow Jones inclusion status would be another blow to Intel’s reputation, which is going through a painful transformation and loss of confidence,” said Susannah Streeter, head of finance and markets at Hargreaves Lansdown. “It would also mean Intel would not be included in exchange-traded funds (ETFs) that track the index, which could have a further impact on stock price. "
Launched in 1968, the Silicon Valley pioneer sold memory chips before moving on to processors that helped launch the personal computer industry. In the 90s, “Intel Inside” stickers transformed basic electronics into premium products and eventually became ubiquitous on laptops.
Intel’s revenue was $54 billion in 2023, down nearly a third from 2021, when Pat Gelsinger took over as CEO. Analysts expect Intel to report its first annual net loss this year since 1986. For the first time in 30 years, the company is valued below $100 billion.
This figure pales in comparison to Nvidia, which is valued at $3,32 trillion, making it the world's second most valuable company. Nvidia has emerged as a pillar of the global semiconductor industry, thanks to the critical role its chips play in supporting generative artificial intelligence technologies, which has driven a seven-fold increase in its shares in the past two years. The company's stock has more than doubled in value this year alone.
Once popular only among gamers hunting for PCs with Nvidia graphics processors, it’s now seen as a barometer for the AI market. The company’s 10-to-1 stock split, which went into effect in June, also helped pave the way for its inclusion in the index, making its fast-growing shares more accessible to retail traders. Intel, on the other hand, has struggled to gain share in the Nvidia-dominated AI chip market, with the leader’s chips hard to come by and even harder to replace in AI data centers, due to its processor technology advantage and high replacement costs.
