Nvidia to replace Intel in blue-chip Dow Jones index as Wall Street rallies to close higher

The move will end Intel's 25-year run in the Dow and further cements Nvidia's status as the generative AI chip leader

Nvidia has been in the spotlight after it became one of the most sought-after stocks amid its meteoric rise during the generative artificial intelligence boom. EPA

Nvidia will be replacing Intel in the top-tier Dow Jones Industrial Average from November 8, further cementing the chip maker's status as the hottest stock market darling amid the artificial intelligence revolution.

The move will end Intel's 25-year run in the Dow – the 30-stock blue-chip index that is considered the primary gauge of the world's biggest stock market – and will be effective before the opening of trading this coming Friday, S&P Dow Jones Indices said on Friday.

California-based Nvidia will join its fellow $3-trillion peers Microsoft and Apple on the Dow. Other tech giants, such as Google, Amazon and Facebook parent Meta Platforms, are not on the index.

The Dow is price-weighted, meaning it assigns weightings based on companies' stock prices that influence their movements. This is compared to the S&P 500, which uses market capitalisation to assign weightings.

Nvidia and Intel have not commented on the shift.

Santa Clara, California-based Nvidia has become one of the most sought-after stocks amid its meteoric rise during the generative AI boom. It has ramped up production of new AI chips that are meant to address demand for more use cases in what is seen as the next phase of the tech revolution.

Shares of Nvidia have leapt about 176 per cent so far in 2024 and have soared nearly seven-fold since early 2023, when generative AI began taking hold. Nvidia closed the week at $135.37. A survey of 39 analysts conducted by the Nasdaq showed a projected average price target of $153.86, with a high estimate of $200. Nvidia is scheduled to report third-quarter earnings on November 20.

Meanwhile Intel, also based in Santa Clara, has seen its stock decline by more than half so far this year, as it struggles to cope up with not just industry demand but Nvidia's surge as well.

The company on Thursday reported a big $16.6 billion loss for the third quarter, but its shares jumped about 8 per cent as it forecast fourth-quarter revenue numbers that surpass analyst projections.

That was part of a mixed bag for technology companies this week on Wall Street, which rallied on Friday to finish the week in the black. Anxiety over next week's heated US presidential elections and a weak US jobs report this week also weighed on investor sentiment.

Shares of Apple, the world's most valuable company, dropped more than 2 per cent after reporting that while it beat revenue estimates, it posted a nearly 36 per cent annual decline in its fiscal fourth-quarter 2024 earnings, driven by a one-time charge of more than $10 billion related to a European tax ruling.

Amazon, the world's largest e-commerce platform, jumped 6.2 per cent after it reported a bigger-than-expected profit for the third quarter.

The Dow added 0.69 per cent, the S&P 500 rose 0.41 per cent and the Nasdaq Composite advanced 0.8 per cent. For the week, however, they declined 0.1 per cent, 1.4 per cent and 1.5 per cent, respectively. The indices remain strong in 2024, having added 11.6 per cent, 20.1 per cent and 21.5 per cent year-to-date.

In Europe, London's FTSE 100 settled 0.8 per cent higher amid the unveiling of the government's high-spending £40 billion ($51.7 billion) budget, which was largely welcomed by financial markets and despite concerns it might stoke inflation.

In other major European indices, Paris' CAC 40 rose 0.8 per cent and Frankfurt's DAX added 0.9 per cent at the close.

Earlier in Asia, Tokyo's Nikkei 225 dove 2.6 per cent after the yen strengthened against the dollar, Big Tech's movement on Wall Street and overall uncertainty on the upcoming US vote.

Hong Kong's Hang Seng index added 0.9 per cent, but the Shanghai Composite retreated 0.2 per cent, despite a positive Chinese manufacturing index report this week.

In commodities, oil prices jumped as much as 2.5 per cent on Friday before paring gains at the close of trading after reports Iran was planning a retaliatory strike on Israel in the coming days, leading to supply concerns.

Brent settled 0.4 per cent higher at $73.10 a barrel, while West Texas Intermediate added 0.33 per cent to $69.49.

Gold, meanwhile, dropped 0.22 per cent to $2,736.41 an ounce, weighed by a stronger greenback, but bets for another rate cut from the US Federal Reserve on the tepid jobs data kept a lid on its losses.