The Dow needs Nvidia to give chipmakers representation in index after Intel's plunge
Intel has fallen so far so fast that the chipmaker's stock price is no longer having an impact on the Dow Jones Industrial Average.
At around $23 a share, Intel is no longer a viable member of the Dow Jones Industrial Average.
That was the conclusion of the S&P Dow Jones committee, which decides when changes need to be made to the 30-member index, long viewed as a key barometer of the U.S. economy.
After markets closed on Friday, S&P said Intel is out. It's being replaced, on Nov. 8, by rival chipmaker Nvidia, which has ballooned to become the world's second most-valuable public company, just a hair behind Apple as of Monday.
With the change, four of the tech industry's six trillion-dollar companies will be in the Dow, with internet giants Alphabet and Meta still on the outside. For those two companies, there are no obvious members to replace. Nvidia, on the other hand, recently leapfrogged Intel as the biggest chipmaker by revenue, creating a clear one-for-one swap opportunity.
A defining characteristic of the Dow is that it's a price-weighted index. That means a stock's significance is based on its price and not the market cap of the company. In getting trounced by Nvidia in artificial intelligence while also losing share of its core PC and data center processor market, Intel has seen its stock price plummet by more than half this year, closing on Friday at $23.20.
Now, Intel is by far the least-significant member of the Dow, with a weighting of less than 0.5%. The next lowest-priced stock is Verizon at around $41. With Intel being the only chipmaker in the index, the sector is underrepresented relative to its position in the economy.
Article