Nvidia overtakes Intel in the Dow Jones index.

Nvidia will overtake Intel in the Dow Jones Industrial Average (DJIA) starting November 8th, according to an announcement made on November 1st 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 was unimaginable three years ago. This shift in leadership is a consequence of strategic mistakes that put Intel at risk of being acquired.

Becoming rich thanks to AI.

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

This giant lost its manufacturing advantage to formidable rivals like TSMC and lagged behind the AI ​​boom due to missteps such as refusing to invest in OpenAI – the company that owns the hugely popular ChatGPT chatbot. Intel also considered acquiring Nvidia but faced opposition from the company's board of directors.

Intel's stock plummeted by half in 2024 as the company struggled 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 skyrocketed 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 computing clusters for AI development.

In addition, OpenAI and Tesla are also major clients of Nvidia. According to Yahoo Finance, any company investing in AI at this point is almost certainly a client of Nvidia.

According to CNBC, Nvidia's revenue has doubled, and at times tripled, in the past five quarters. Furthermore, Nvidia also reported very high demand for its next-generation AI GPU, Blackwell.

Nvidia shares have surged more than 170% this year after rising approximately 240% in 2023 due to investor demand. According to Nasdaq, Intel's market capitalization is currently $99 billion, far behind Nvidia's $3.32 trillion – the world's second-largest company after Apple.

A shock for Intel

The DJIA comprises 30 leading companies representing various industries. Launched in 1896, it is one of the most important and oldest stock market indices in the United States, clearly reflecting the picture of the American economy .

In its early decades, the index primarily comprised stocks in the heavy industry and energy sectors. However, in recent decades, technology stocks have appeared on the Dow Jones due to their increasing dominance in the US stock market.

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

This replacement clearly reflects Nvidia's overwhelming influence over Intel. The addition of Nvidia will ensure "more complete representation of the semiconductor industry," S&P Dow Jones Indices stated in a press release.

"Losing its position in the DJIA would be another blow to Intel's reputation, as the company grapples with a painful transition and a loss of confidence."

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

Intel and Nvidia's stocks reacted immediately, although the "change of leadership" won't happen until November 8th. Nvidia's stock rose nearly 3% in after-hours trading while Intel's fell nearly 2%, Business Insider reported on November 1st. Both Intel and Nvidia declined to comment to the media.

The Rise of AI

According to Business Insider, in late September, analysts at Susquehanna stated that Nvidia had effectively become a global "supporter" of AI. Joining the DJIA now further solidifies Nvidia's leading position in the market.

"This is another moment that demonstrates the strength of CEO Jensen Huang and Nvidia, and speaks to the AI ​​revolution and Nvidia's importance to the market," said analyst Dan Ives of Wedbush Financial, commenting on the event.

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