Nvidia is replacing OG chipmaker Intel in the Dow Jones, ushering in a new era for tech
Out with the old… Legacy chipmaker Intel will be removed from the Dow Jones this week after 25 years in the blue-chip index. The Dow tracks the stocks of 30 major public US companies (typically industry leaders with long, profitable track records). Coke, McDonald’s, Nike, 3M and Chevron are a few of the Dow’s power players. Intel will be replaced by chip rival Nvidia, whose shares are up 2,500% over the past five years (Intel's have fallen 60% in that same period).
Short circuit: Intel beat Q3 estimates last week but reported a massive quarterly loss of $16.6B, driven mostly by restructuring and write-off charges.
Long game: In August, Intel laid off 15K employees and said it would stop “non-essential work” in hope of cutting $10B in costs next year.
Bad intel… For decades, Intel was Silicon Valley’s biggest chipmaker as its PC processors dominated computing. But its relevance has waned as AI computing booms, led by Nvidia’s processors. Intel’s revenue has been falling since the pandemic PC-buying frenzy ended. To compete with Nvidia, Intel launched its own AI processors but has struggled to catch up: last week the company scrapped a $500M sales goal for its Gaudi 3 AI chip. Meanwhile, Nvidia’s revenue has more than doubled in each of the past five quarters, and its profit has ballooned thanks to insatiable demand for its AI chips.
It’s a changing of the guard… Nvidia replacing Intel shows how AI chips are outpacing traditional processors as a driving force in tech. As the only pure-play chipmaker in the Dow, Nvidia could represent the new face of the semiconductor industry. In 2015, Apple replaced AT&T in the Dow as consumer electronics — namely iPhones — began to overshadow traditional telecom. And this year ecomm titan Amazon replaced brick-and-mortar Walgreens.