The Dow Jones Industrial Average (DJIA), one of the key indicators of economic health in the U.S., will experience significant changes on November 8. Nvidia, one of the fastest-growing tech companies and a leader in artificial intelligence, will replace Intel in the index. This change, announced by S&P Dow Jones Indices, reflects the rise of the artificial intelligence sector and Intel’s financial stagnation, having been in the DJIA for 25 years.
Intel’s exit from the index is the result of a series of financial challenges the company has faced in recent years. After more than two decades as a benchmark in the DJIA, problems in its data center and manufacturing divisions, coupled with a significant stock value drop—a 30% decline in just one day following its earnings report in August—have put the company in a difficult position. In the second quarter of 2024, Intel reported losses of $1.6 billion and shortly after announced a restructuring that included the layoff of 15,000 employees.
In contrast, Nvidia has seen its market value soar, largely due to the increasing demand for artificial intelligence solutions and its powerful graphics cards. The company has reached a market capitalization of $3.34 trillion, briefly making it the most valuable company in the world. Currently, Nvidia is the second most highly valued company globally, joining other tech giants like Microsoft, Apple, and Amazon in the exclusive group of companies worth over a trillion dollars on the DJIA.
Nvidia’s evolution has been meteoric. In November 2022, its stock price was $14.16; one year later, it had reached $45.01, and today it stands at $135.37. This impressive trajectory represents an 850% increase over the last two years. Nvidia’s entry into the DJIA reflects its strength in the industry, meeting the criteria of the committee that selects the companies for the index, including high market capitalization, leadership in its sector, and sustained financial growth.
In addition to the change of Intel for Nvidia, the DJIA will also see the inclusion of Sherwin-Williams in place of Dow Inc., aiming to balance the representation of the materials sector in the index. Meanwhile, the Dow Jones Utility Average (DJUA) will include Vistra Corp. as a replacement for The AES Corp., aligning with the trend towards greater representation of independent energy producers and renewable electricity providers in the utilities sector.
These changes in the DJIA and DJUA indices not only seek to more accurately reflect the dynamics of key sectors like semiconductors and energy but also to adapt to the new realities and demands of the global market, where artificial intelligence and energy sustainability are increasingly crucial.
Source: Portal Financiero