Nvidia set to join Dow Jones Industrial Average in rejig

Nvidia, the world’s biggest AI chip maker, is set to join the Dow Jones Industrial Average, the US’s oldest equity benchmark index.

In a statement, late Friday, S&P Dow Jones Indices said that the AI chip maker will replace its rival Intel corporation in the benchmark indices.

Additionally, Sherwin-Williams Co, a paint maker, will replace Dow Inc. in the industrial average.

These changes will take effect before the start of the trading session on Friday, November 8, according to the statement.

Nvidia shares closed at $139.31, climbing 2.91% on Nasdaq during post-trading hours on Friday after the news broke out.

Shares of Sherwin-Williams Co were at $370.00, up 3.36% in the after-trading session on Friday.

Intel and Dow’s stocks were in the red at 1.85% and 0.86%, respectively following the announcement.

Why now?

Nvidia has been at the heart of an AI boom with its stock skyrocketing over 900% in two years and rallying 181%, year-to-date.

“Nvidia is a well-run company and joining the Dow demonstrates just how powerful its rally has been in recent years after it was at the right place at the right time when no one else was,” said Scott Colyer, chief executive at Advisors Asset Management, Bloomberg reported.

Nvidia has been at the centre of the hype surrounding AI. With its current valuation at $3.32 trillion, the chip maker is likely to overtake Apple as the world’s most valuable company on Monday if the rally continues.

Intel joined the 128-year-old Dow Jones index in November 1999, along with Microsoft, Home Depot and SBC Communications.

Intel has been struggling recently, cutting its workforce by 15%, slashing spending and suspending investor payouts. The company’s shares have plunged 54% this year.

The Dow Jones Industrial Average was first published on May 26, 1896, as an index of 12 industrial stocks. Over the years, it has evolved to include 30 stocks, representing shares from the technology, financial, healthcare, and consumer sectors, as per Bloomberg.

The index has faced flak over the year for lacking technology scrips that have been dominating the US stock market in recent years and for having a much narrower equities gauge than the Nasdaq 100 Index or the S&P 500.

Nvidia’s addition underlines the index’s shift towards more relevant companies.