After a 25-year presence on the Dow Jones Industrial Average, Intel (INTC.O) is stepping aside for Nvidia (NVDA.O), signaling a major industry shift as Nvidia gains prominence in artificial intelligence (AI) and advanced graphics, areas where Intel has struggled to keep up. S&P Dow Jones Indices announced the replacement on Friday, with Nvidia set to join the blue-chip index next week, accompanied by Sherwin-Williams (SHW.N), which will replace chemical giant Dow Inc. (DOW.N). This reshuffling underscores the changing dynamics within the tech and industrial sectors, particularly the rapid rise of companies capitalizing on AI, a space in which Nvidia has established itself as a major player.
Intel’s removal from the Dow marks a significant moment for the company, as it contends with challenges that have stymied its growth in recent years. Once a semiconductor powerhouse, Intel has lost ground to rivals, particularly Taiwan Semiconductor Manufacturing Company (TSMC) (2330.TW), in advanced manufacturing. Additionally, Intel missed a crucial opportunity by forgoing early involvement in the generative AI boom, such as passing on an investment in OpenAI, the company behind the widely popular ChatGPT. These missteps have taken a toll on Intel’s stock performance, with shares declining 54% this year, making it the worst performer on the Dow. This downturn has also positioned Intel with the lowest stock price on the price-weighted index, a situation that compounds the challenges it faces in today’s competitive semiconductor landscape.
The consequences of Intel’s removal extend beyond optics. Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented on the potential impact, describing the exclusion as “another reputational blow” for Intel as it navigates a challenging transformation. Streeter noted that Intel’s absence from the Dow could lead to reduced visibility in exchange-traded funds (ETFs) that track the index, which may add further downward pressure on Intel’s share price. Losing its spot on the Dow, a benchmark for corporate influence and stability, reflects Intel’s shift from the cutting-edge leader it once was.
In the 1990s, Intel became synonymous with the personal computer revolution, thanks in large part to its “Intel Inside” campaign, which helped turn its processors into a household name. This branding, combined with technological advances, positioned Intel as a central force in the tech industry. However, the company’s dominance has diminished in recent years as competitors like Nvidia and TSMC capitalized on emerging trends in gaming, AI, and advanced chip manufacturing. Intel’s revenue, which reached $54 billion in 2023, has dropped by nearly one-third since Pat Gelsinger took over as CEO in 2021. Analysts now predict that Intel will report its first annual net loss since 1986. Its market value has also suffered, dropping below $100 billion for the first time in three decades.
While Intel’s position has weakened, Nvidia’s success story is in stark contrast. With a valuation soaring to $3.32 trillion, Nvidia has become the world’s second-most valuable company, second only to Apple. Nvidia’s recent stock surge — a sevenfold increase over the past two years — reflects its leadership in AI-driven technology. The company’s graphics processing units (GPUs), which were once sought after primarily by gamers, have become essential for AI applications, ranging from natural language processing to complex machine learning models. This shift has made Nvidia a central player in the AI sector, with its GPUs in high demand by major data centers and tech companies worldwide. Nvidia’s stock has more than doubled this year alone, and the company’s recent 10-for-one stock split in June made its shares more accessible to retail investors, further broadening its appeal.
Nvidia’s GPUs have become nearly irreplaceable in AI-driven operations, thanks to their advanced processing capabilities and the prohibitive cost of switching to alternative technologies. This has created a substantial lead for Nvidia over competitors like Intel, who continue to struggle in capturing market share in the AI chip sector. While Intel has expressed optimism about its PC and server businesses, the company acknowledged that it has “a lot of work to do.” Intel’s exclusion from the Dow signals the broader industry sentiment that Nvidia is a leader in the future of semiconductor innovation.
This reshuffling comes at a critical time for the semiconductor industry, as AI becomes an increasingly central focus for tech companies and investors alike. Nvidia’s position on the Dow reinforces its role as a cornerstone in the global AI infrastructure, while Intel’s removal highlights the pressures facing traditional tech giants to adapt to rapidly evolving technologies. As the Dow reflects on these industry shifts, Nvidia’s entry symbolizes the growth potential of AI, while Intel’s departure is a reminder of the consequences of lagging behind in a fast-paced sector.
