Intel’s 25-year run in the Dow Jones Industrial Average came to an end on Friday after S&P Global announced that rival Nvidia would replace the chipmaker in the prestigious index. The move aims to provide a more representative exposure to the semiconductor industry, as Intel had the lowest share price among the 30 Dow stocks.
Shares of Intel plummeted 1.8% following the announcement, but some analysts see it as an opportunity for the company to focus on its core turnaround efforts. S&P Global’s decision is based on the index’s price-weighted composition and Nvidia’s significantly higher share price.
Intel has been working to revamp its business, with a focus on cost-cutting initiatives, 18A foundry process advancements, and artificial intelligence (AI) chip development. If successful, these efforts could help the company make a comeback. However, recent stock performance of Dow outcasts like Walgreens and AT&T suggests that removal from the index can be a mixed bag.
In the past, some companies removed from the Dow have underperformed, while others have outdone the broader market. A 2017 study found that long-term outperformance for ex-Dow components is possible, but the sample size is limited and varied. Intel investors should focus on the company’s upcoming initiatives rather than its removal from the index.
Source: https://www.fool.com/investing/2024/11/05/intel-dropped-from-dow-djia-history-happen-next