Nvidia Joins Dow Jones: The New Powerhouse in AI Gold Rush

The shift in the semiconductor industry is prominently reflected in the latest movements in major U.S. stock indices. On November 1, after the market closed, S&P Dow Jones Indices announced that Nvidia (NVDA) will join the Dow Jones Industrial Average, taking the place of Intel (INTC), the current semiconductor component. This move will be effective from the start of trading on November 8.

This structural change marks the inclusion of Nvidia, alongside Apple and Microsoft, representing companies with a combined market capitalization exceeding $3 trillion. The update comes amidst Nvidia's continuing dominance in the AI and semiconductor sector, largely fueled by heightened demand for AI applications, which began with OpenAI's launch of ChatGPT nearly two years ago.

Following the announcement, Nvidia saw its share price increase by over 3% in after-hours trading, while Intel's stock experienced a decline of more than 2%. Currently, Nvidia boasts a market capitalization of approximately $3.32 trillion, making it nearly thirty times larger than Intel, which stands at about $990 billion. This disparity illustrates Nvidia's substantial growth, as its stock has surged over 173% since the beginning of the year, while Intel has seen a decline of nearly 54%.

Nvidia's robust market position is attributed to its pivotal role in the AI sector. Referred to by some analysts as the "shovel seller in the AI gold rush," Nvidia has established itself as a leader in supplying essential components to firms engaged in AI advancement. This positions the company favorably regardless of which company benefits most from the AI race.

Conversely, Intel has faced significant challenges, including delivering disappointing earnings reports earlier this year. In August, the company's financial performance was so underwhelming that it was described by analysts as the worst quarterly earnings release in Intel's history. The company has since announced workforce reductions and has been considering strategic options to rejuvenate its business, such as potential asset divestitures.