Nvidia co-founder and CEO Jensen Huang speaks at an event in Taipei, Taiwan, June 2, 2024.
Annabelle Chronicle | Bloomberg | Getty Images
About $23 per share, Intel No longer an active member of the Dow Jones Industrial Average.
That’s the conclusion of the S&P Dow Jones committee, which decides when adjustments are needed to the 30-member index, long seen as a key barometer of the U.S. economy.
After the close on Friday, Standard & Poor’s said Intel had exited the market. On November 8, the company will be replaced by a rival chipmaker NVIDIAhas quickly become the world’s second most valuable listed company, trailing only apple As of Monday.
With the change, four of the technology industry’s $6 trillion companies will enter the Dow, including dot-com giants letter and Yuan Still out there. For both companies, there is no obvious member replacement. Nvidia, on the other hand, has recently Beyond Intel Being the largest chipmaker by revenue creates a clear one-to-one exchange opportunity.
A distinctive feature of the Dow is that it is a price-weighted index. This means that a stock’s importance is determined by its price, not the company’s market capitalization. Intel’s stock price has tumbled by more than half this year to close at $23.20 on Friday as it was beaten by Nvidia in artificial intelligence and lost market share in core PC and data center processors.
Today, Intel is the least important component of the Dow, with a weight of less than 0.5%. The next lowest priced stock is Verizon About $41. Because Intel is the only chipmaker in the index, the industry is underrepresented relative to its position in the economy.
“A big reason for this decision was that the semifinals were not represented,” Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said in an interview. “Industry representation and price matter.”
Nvidia stock is good for the company. Nvidia would account for 18% of the index in market capitalization terms, but its stock price would only give it the 21st largest weighting, behind Chevron and ahead of 3M. Nvidia announced a 10-for-10 stock split in May as the company prepared to join the Dow.
Silverblatt said the technology sector’s weight in the Dow will rise from 18.9% to about 19.5%, although its market weight will be around 58%. Larger weight changes follow Sherwin-Williams Company Join index and replace at the same time Dow CorporationSilverblatt said this has brought the materials industry’s share from less than 1% to about 5%.
As for Alphabet and Meta, the wait could go on for a long time. Amazon Joining the Dow Jones Index in January gives the Internet industry greater representation in the index. Alphabet’s situation is somewhat complicated because both its Class A and Class C shares are publicly traded. Meta, currently trading at nearly $562, has the highest weighting in the Dow Jones Index, just ahead of UnitedHealth Group.
Given the increased representation in the tech industry as a whole, there won’t be any obvious moves to include Silicon Valley mega-caps in the future.
“In order to put one in, you have to take one out,” Silverblatt said. “It’s going to be difficult to get into the Dow 31.”
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