Nvidia will officially replace Intel as a component of the Dow Jones Industrial Average (DJIA) on November 8, marking a major shift in AI technology becoming mainstream.Nvidia's selection reflects its success in the AI space, while Intel's exit reflects its recent difficulties in the semiconductor market.

AI craze drives the rise of Nvidia

Nvidia's graphics processing units (GPUs) have an irreplaceable position in the AI field and have become an important pillar of large-scale AI projects by technology giants such as Microsoft, Google and Meta.Driven by this, Nvidia's share price has risen by more than 170% so far this year and by 240% in 2023.

At present, Nvidia's market value reaches US$3.3 trillion, making it the second largest company in the world by market value.Last year's 10-to-1 split not only made Nvidia shares more attractive, but also more adaptable to the Dow's price-weighted structure.

Intel's decline: Missing the AI wave

As a former semiconductor giant, Intel has faced manufacturing bottlenecks and lack of AI chip market challenges in recent years.Intel's traditional positioning of focusing on PC processors has left it lagging behind in the AI space, and competitors such as AMD and TSMC have quickly captured the market.Intel's share price fell 54% this year, making it the Dow's worst-performing component, and its exit could further reduce its exposure in index funds.

Dow focuses on AI leaders

With Nvidia joining, the Dow now includes four trillion-dollar technology giants: Apple, Microsoft, Salesforce and Nvidia.This change reflects the Dow's emphasis on AI and cloud computing technology, and further conforms to market interest and investment trends in AI innovation.

Market outlook

Nvidia's AI-driven growth prospects have made it a hot stock in the technology field, and as AI demand continues to rise, its growth momentum is expected to continue to strengthen.In contrast, Intel's strategic reorganization shows that it still has major challenges to address, especially as it attempts to regain its position in the AI market.

For investors, Nvidia's inclusion in the Dow highlights positive market expectations, and Intel's exit may mean that the semiconductor veteran will face more resistance.