This year, Intel's stock price has fallen nearly 60%, making it the worst-performing stock in the Dow, and Intel is also the least influential member in the Dow. If Intel is kicked out of the Dow, it will further damage its already damaged reputation and further hit its stock price.
During the technology bubble period in 1999, $Intel (INTC.US)$ and $Microsoft (MSFT.US)$ was one of the first technology companies to enter the dow jones industrial average index. However, due to a significant decline in stock prices, intel may be removed from this blue chip index.
The last update to the dow jones index was in February, when the struggling chain of pharmacies $Walgreens Boots Alliance (WBA.US)$ Replaced. $Amazon (AMZN.US)$ Analysts point out that Intel's stock price has fallen nearly 60% this year, making it the worst-performing stock in the Dow. If Intel is kicked out of the Dow, it will further damage its already damaged reputation and further hit its stock price.
Stock price is a key factor in the Dow's stock selection, while the S&P 500 Index considers market cap more. The Dow Jones Stock Selection Committee monitors whether the stock with the highest price is more than 10 times higher than the stock with the lowest price. Currently, the highest-weighted stock, UnitedHealth Group, has a stock price of about 29 times that of Intel.
In addition, Intel is also the least influential member of the Dow. On August 29th, Intel's closing price was $20.13, accounting for only 0.32% of the Dow's weight.
Intel missed the wave of artificial intelligence and has been increasing losses in its attempts to challenge Taiwan Semiconductor's contract manufacturing business. Since its peak in August 2000, Intel's stock price has fallen more than 70%, and its market cap has also dropped below $100 billion.
In order to turn the tide, Intel announced the suspension of dividends and a workforce reduction of over 15% in last month's financial report. However, some analysts and former board members believe that these measures may be too late.
Who will replace Intel?
Analyst Ryuta Makino believes that $NVIDIA (NVDA.US)$ may replace Intel to enter the Dow Jones Industrial Average. Nvidia's chips play a key role in generative AI and its stock price has risen by over 160% this year, making it one of the most valuable companies in the world. In May, Nvidia conducted a stock split, which also increases its chances of being included in the Dow Jones.
However, some investors express concerns about Nvidia's stock volatility, as Dow Jones prefers stable stocks.
Another option is Taiwan Semiconductor, which has a history of nearly a century and strong production capabilities in the United States. $Texas Instruments (TXN.US)$
Daniel Morgan, Senior Portfolio Manager at Synovus Trust, states that Texas Instruments' stock price has risen by over 20% this year, currently at $214.34, close to the average price of Dow Jones components at $209. Former Chairman of the Dow Jones Index Committee, David Blitzer, mentioned that 'in the event of a stock being removed, a stock with a price close to the current list average price may be given priority consideration as a replacement.'
