Which stock could replace Intel in the Dow as INTC shares slump?
Sep. 04, 2024 5:04 AM ET
By: Jessica Kuruthukulangara, SA News Editor
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Intel's (NASDAQ: INTC) recent slump could mean that the U.S. chipmaker may be replaced in the Dow Jones Industrial Average ( DJI) after being a part of the blue-chip index for nearly a quarter of a century.
The company and Microsoft ( MSFT) were the first two tech firms to join the 127-year-old index during the dot-com era in the late 1990s.
But Intel ( INTC) has been struggling as its last earnings report raised concerns of its ability to turn around its business and prompted speculation that it may sell assets.
INTC slumped 8.8% to $20.10/share on Tuesday amid a broader chip stock decline, and has been trading near the lower end of its 52-week trading range ($18.84 -$51.28) for over a month.
The stock, which lost more than half its value YTD, is the worst performer on the Dow ( DJI) and has the lowest price in the index.
"Intel ( INTC) being removed (from the Dow) was likely a long time coming," Ryan Detrick, chief market strategist at Carson Group, told Reuters.
Dow ( DJI) inclusions are decided after evaluating stock prices and whether the company helps the index maintain desired exposure to the sector. The last company to be added was Amazon ( AMZN) in February, replacing Walgreens Boots Alliance ( WBA).
Now the question is, which stock is well-positioned to replace Intel ( INTC) in the Dow ( DJI)?
The crowd favorite is Nvidia (NASDAQ: NVDA), which has been leading the AI wave and whose stock more than doubled in value this year. While some believe Nvidia is too volatile for the price-weighted Dow ( DJI), its recent stock split likely made it the best candidate to give the index more AI representation.
Another potential candidate to replace Intel ( INTC) in the Dow ( DJI) is rival chipmaker Texas Instruments (NASDAQ: TXN), according to Daniel Morgan, senior portfolio manager, Synovus Trust. TXN has gained 18.4% this year.
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