Nvidia 'dethrones' Intel in the Dow Jones index

Nvidia will "dethrone" Intel in the Dow Jones Industrial Average (DJIA) from November 8, according to an announcement on November 1 by S&P Dow Jones Indices.

Nvidia CEO Jensen Huang speaks at an event in June 2024 - Photo: AFP

For Intel, being ousted by Nvidia would have been unthinkable three years ago. The shift in fortunes is the result of strategic mistakes that have left Intel at risk of being acquired.

Get Rich With AI

Intel was a dominant force in the technology industry during the rise of personal computers and joined the DJIA 25 years ago, becoming one of the first two technology companies to appear in the index.

However, Intel failed to capitalize on the advent of smartphones and mobile devices in the early 2000s and is now far behind in the race to deliver AI chips.

The giant lost its manufacturing edge to rivals like TSMC and was slow to embrace the AI ​​boom through missteps like refusing to invest in OpenAI, the company behind the popular ChatGPT chatbot. Intel also considered buying Nvidia but faced opposition from the company’s board.

Intel's stock has fallen by half in 2024 as the company struggles with manufacturing difficulties and fierce industry competition.

According to the New York Times, on October 31, Intel announced a loss of $16.6 billion in the third quarter - the largest loss in the company's 56-year history.

Meanwhile, Nvidia has been soaring in the global semiconductor industry thanks to its advanced AI chips.

Nvidia’s biggest customers are also tech giants like Amazon, Meta, Microsoft and Alphabet. These corporations are buying Nvidia’s graphics processing units (GPUs) in large quantities to build computer clusters for AI development.

In addition, OpenAI and Tesla are also major customers of Nvidia. According to Yahoo Finance, any company investing in AI at the moment is almost certainly a customer of Nvidia.

According to CNBC, Nvidia's revenue has doubled, and sometimes tripled, over the past five quarters. Not only that, Nvidia also said that demand for its new generation of AI GPU products called Blackwell is very high.

Nvidia shares have surged more than 170% this year after rising about 240% in 2023, buoyed by investor enthusiasm. Intel’s market capitalization is now $99 billion, according to Nasdaq, well below Nvidia’s $3.32 trillion, the world’s second-most valuable company after Apple.

Shock to Intel

The DJIA includes 30 leading companies representing different industries. Launched in 1896, it is one of the oldest and most important stock indexes in the United States, clearly reflecting the picture of the US economy.

In its early decades, the index was dominated by stocks in the heavy industry and energy sectors. However, in recent decades, technology stocks have appeared on the Dow Jones as they have increasingly dominated the US stock market.

Before the market opens on November 8, Nvidia will officially be included in the DJIA index along with Apple and Microsoft.

The move clearly reflects Nvidia's outsized influence over Intel. Adding Nvidia will ensure "more complete representation of the semiconductor industry," S&P Dow Jones Indices said in a press release.

“Losing its place in the DJIA would be another blow to Intel’s reputation as the company grapples with a painful transition and loss of confidence.

This also means that Intel will not be included in exchange-traded funds (ETFs) that track this index and could further impact the stock price," Susannah Streeter, director of currency and markets at Hargreaves Lansdown, told Reuters.

Intel and Nvidia stocks reacted immediately, even though the change of ownership won’t happen until November 8. Nvidia shares rose nearly 3% in after-hours trading while Intel fell nearly 2%, Business Insider reported on November 1. Both Intel and Nvidia declined to comment to the media.

The Rise of AI

According to Business Insider, analysts at Susquehanna Company commented in late September that Nvidia has effectively become a "supporter" of AI worldwide. Joining DJIA now further affirms Nvidia's leading position in the market.

“This is another moment that shows the power of CEO Jensen Huang and Nvidia, and speaks to the AI ​​revolution and the importance of Nvidia to the market,” Wedbush analyst Dan Ives said of the event.

Source: https://tuoitre.vn/nvidia-soan-ngoi-intel-trong-chi-so-dow-jones-20241103094040241.htm