Written by Arsheeya Bajwa
(Reuters) – Intel ( INTC ) will be replaced by Nvidia ( NVDA ) on the blue-chip Dow Jones Industrial Average index after a 25-year run, underscoring volatility in the chipmaking market and marking another reversal for the semiconductor company's drag hard.
Nvidia will join the index next week along with paint maker Sherwin-Williams, which will replace Dow, S&P Dow Jones Indices said on Friday.
Once a major force in chipmaking, Intel in recent years has given its manufacturing edge to rivals TSMC and missed out on the artificial intelligence manufacturing boom after missteps including passing on investment in OpenAI owned by ChatGPT.
Shares of Intel have fallen 54% this year, making the company the worst performer in the index and leaving it with the lowest-valued stock in the weighted Dow.
Shares of Intel fell 1.6% in extended trading on Friday, while those of Nvidia rose 2.2%.
The development comes a day after Intel expressed optimism about the future of its PC and server business, reporting current quarter revenue above estimates but warning that it “has a lot of work to do.”
“Losing the status of inclusion in the Dow Jones would be another blow for Intel, as it faces painful changes and loss of confidence,” said Susannah Streeter, head of finance and markets at Hargreaves Lansdown.
“It could also mean that Intel is not included in exchange-traded funds (ETFs) that track the index, which could impact the share price further.”
Founded in 1968, the Silicon Valley pioneer sold memory chips before switching to processors that helped launch the personal computer industry.
In the 1990s, “Intel Inside” stickers transformed electronics into premium products, and eventually became ubiquitous on laptops.
Intel's revenue was $54 billion in 2023, down nearly a third from 2021, when Pat Gelsinger took over as CEO. Analysts expect Intel to report its first annual loss this year since 1986.
The company is worth less than $100 billion for the first time in 30 years.
That pales in comparison to Nvidia, which sits at a valuation of $3.32 trillion, making it the second most valuable company in the world.
NVIDIA's AI LEAD
Nvidia has emerged as a cornerstone of the global semiconductor industry, thanks to the key role its chips play in powering AI productivity technologies that have fueled a sevenfold increase in its shares over the past two years.
The company's shares have doubled this year alone.
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