Chip giant replacement, NVIDIA will be included in the Dow Jones, replacing Intel

The "throne" of chip giants is reflected in the major blue-chip indices of the U.S. stock market.

On November 1st, Friday, after the U.S. market closed, S&P Dow Jones Indices announced that NVIDIA (stock code: NVDA) will be included in the Dow Jones Industrial Average, replacing the current chip industry component Intel (code: INTC). Another adjustment announced for the Dow is that Sherwin-Williams Co. (code: SHW) will replace Dow Chemical (code: DOW).

The announcement stated that these adjustments will take effect before the market opens on Friday, November 8th. This means that next Friday, NVIDIA will officially become a component of the Dow. At that time, the Dow will include all three stocks with a current market value exceeding $3 trillion: Apple, Microsoft, and NVIDIA.

After the announcement of the adjustments, NVIDIA's stock price continued to rise in after-hours trading, currently up over 3%, while Intel's stock price saw an expanded decline, having dropped over 2% in after-hours trading.

As of Friday's close, NVIDIA's market value was approximately $3.32 trillion, while Intel's market value was close to $99 billion, less than 3% of NVIDIA's. This is still after Intel's stock surged 7.8% on Friday following the release of a positive earnings report.

As of Friday's close, NVIDIA's stock price has cumulatively risen over 173% since the beginning of the year, while Intel's has cumulatively fallen nearly 54%.

Nearly two years ago, OpenAI launched ChatGPT, sparking a wave of development and application in artificial intelligence (AI). NVIDIA, the AI chip giant, has been a major winner in this wave, becoming a darling of AI concept stocks, and was dubbed "the most important stock on Earth" by Goldman Sachs traders in February of this year.

In a report in May, Bank of America referred to NVIDIA as "the shovel seller king of the AI gold rush," believing that regardless of whether Microsoft, Google, or any other company profits in the AI race, NVIDIA is in a favorable position.

The reasoning is simple: during the gold rush of the 1850s, merchants selling shovels made more money than the actual gold miners. Instead of trying to pick a winner in the AI race, why not directly invest in a company that provides the necessary hardware for all AI competitors? Less than a month after the Bank of America report was released, NVIDIA's market value surpassed $3 trillion in early June, becoming the third company to reach a market value of $3 trillion after Apple and Microsoft, briefly topping the global rankings in June. Last Friday, during trading, NVIDIA's market value briefly exceeded Apple's, almost claiming the title of the highest market value company.

In stark contrast to NVIDIA, Intel is facing a rare major crisis in its 56-year history this year.

In early August, Intel released what analysts called "the worst earnings report ever" for Q2, with revenue regressing to mid-2010s levels, a year-on-year decline of 1%, and Q3 revenue guidance indicating a potential drop of up to 11%, while analysts had expected over 1% growth. The company also announced plans to lay off about 15,000 employees, over 15% of its total workforce, and for the first time since 1992, it would suspend dividends starting in Q4.

Subsequent reports indicated that Intel is actively formulating plans for "self-rescue." At the September board meeting, Intel considered various strategic options, including cutting factory projects by billions of dollars, selling off some subsidiaries, including previously acquired Mobileye and Altera, and even potentially splitting its core business into independent companies.

On Thursday after the market closed, Intel's Q3 earnings report finally impressed Wall Street, with the year-on-year decline in total revenue for the third quarter being less than expected, and data center revenue exceeding expectations with a 9% growth. The guidance provided by Intel was more optimistic than Wall Street's expectations, forecasting Q4 revenue between $13.3 billion and $14.3 billion, with the midpoint exceeding analysts' expectations of $13.63 billion.

On the first trading day after the earnings report was released, Intel's stock price rebounded significantly on Friday, reaching a closing high not seen since October 14, erasing nearly three weeks of losses