On November 1, S&P Dow Jones Indices announced that Nvidia would be included in the Dow Jones Industrial Average, replacing Intel, the current component of the Dow chip industry. This change marks the growing importance of artificial intelligence and high-performance computing. Nvidia as AI While leading suppliers of GPUs can attract more investors to emerging technologies, traditional semiconductor companies are under pressure, especially in high-growth areas such as data processing and AI model training.
This adjustment may also make more investors aware of the potential impact of AI on the future economy, which in turn will increase valuations in related sectors. This will guide the direction of investment in the market and further increase the weight of the technology sector in the overall market.
Nvidia's stock price and order volume are flying together
With the rapid rise of the AI industry, Nvidia has established itself as an industry leader. This year, the company's stock price has risen by more than 170%, and its market value once exceeded $3.5 trillion, becoming a leader in the U.S. stock market.
Tech giants such as Microsoft, Meta, Google and Amazon are aggressively purchasing Nvidia's graphics processing units (GPUs) to build data centers that support AI applications. Over the past five quarters, Nvidia's revenue has grown more than 100% year-over-year, with three quarters more than quadrupled. The company's chief executive, Jensen Huang, has repeatedly stated publicly that the demand for the next generation of AI GPUs, Blackwell, is extremely strong.
Securities analysts pointed out that the number of orders for Nvidia's GB200 chip has increased significantly, and Microsoft is the largest buyer of the chip. Microsoft's order book is forecast to grow by 3 to 4 times in the fourth quarter, far more than all other cloud service providers combined. This not only demonstrates NVIDIA's technological leadership in the field of AI, but also reflects the growing global demand for high-performance computing resources.
Intel withdrew
Intel used to be a leader in chip manufacturing, especially in the 90s of the last century. However, in recent years, its manufacturing advantages have been gradually surpassed by competitors such as TSMC, and there have also been major mistakes in the layout of the generative AI field, including missing investment opportunities in OpenAI, the parent company of ChatGPT.
Intel's share price has fallen 54% year-to-date, making it one of the worst-performing stocks on the Dow Jones Industrial Average and the lowest-priced stock in the index. Despite this, Intel expressed optimism about the outlook for its PC and server business in the previous day's earnings report, expecting revenue to beat expectations for the current quarter. However, the company also warns that there is still a lot of work to be done in the future.
Hargreaves Lansdown Susannah, Head of Money and Marketing at Lansdown "Exclusion from the Dow Jones would be a further blow to Intel's reputation, especially at a time when the company is going through a difficult transition and declining market confidence," Streeter noted. ”
According to the data, Intel's revenue in 2023 will be $54 billion, a decrease of nearly one-third compared with 2021, when Pat Gelsinger took over as CEO. Analysts expect Intel to post its first annual net loss this year since 1986.
Nvidia joined the Dow, and the stock price hit a new high
Shares of Nvidia and Sherwin-Williams both rose more than 3% in after-hours trading after the announcement, while Intel fell nearly 2%. As a "shovel seller" in the field of AI computing power, NVIDIA's value has grown by leaps and bounds in the past two years. Last year, Nvidia's stock price rose by 239%, and on top of that, it has climbed more than 173% this year. Currently, Nvidia's market capitalization has reached $3.3 trillion, second only to Apple, and the second largest publicly traded company in the world.
With the addition of Nvidia, four of the six companies in the "trillion market capitalization club" of the U.S. stock market have been included in the constituent stocks of the Dow Jones Industrial Average, namely Apple, Microsoft, Nvidia and Tesla.
The two companies that were not included were Google parent company Alphabet and Meta Platforms, which Amazon only joined in February. Tech giants such as Microsoft, Meta, Google, and Amazon are massively purchasing Nvidia's graphics processing units (GPUs) to build data centers that support AI applications. Nvidia's revenue has grown more than 100% year-over-year in the last five quarters, with three of those quarters at least quadruple.
Nvidia CEO Jensen Huang has repeatedly described demand for Blackwell, the next generation of AI GPUs, as "crazy."
The rise of Nvidia marks the beginning of a new era: AI has become the new engine of global economic growth, and NVIDIA is a key driver of this change.
