The Dow Jones Industrial Average is the oldest stock market index in the U.S. It is a price-weighted index that tracks the performance of 30 of the largest publicly traded companies in the country. Its member companies span a variety of sectors and industries, and it is considered by many to be a reliable indicator of stock market performance and the health of the overall economy. There are only a few broad criteria for a company’s inclusion:
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Be incorporated and headquartered in the U.S.
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Have the largest percentage of revenue derived from the U.S.
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Be a member of the S&P 500.
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Be a non-transportation or non-utility company.
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Because it’s price-weighted, the highest-priced stock should be no more than 10 times that of the lowest-priced stock in the index.
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The company must have “an excellent reputation, demonstrate sustained growth, and is of interest to a large number of investors,” according to S&P Global.
Nvidia (NASDAQ: NVDA) is the most recent addition to the Dow Jones, joining the benchmark on Nov. 8 and replacing chipmaker Intel. That makes it one of only three companies to make the cut so far this year.
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Over the past decade, Nvidia’s revenue has climbed 2,300%, while its net income has surged 8,460%. This, in turn, has fueled stock price gains of 28,940% (as of this writing). As a result of its meteoric rise, the artificial intelligence (AI) chipmaker recently completed a 10-for-1 forward stock split after years of strong business and financial results. The new, lower share price paved the way for Nvidia’s inclusion in the Dow.
Despite Nvidia’s parabolic move higher, many on Wall Street believe the stock still has further to run.
Nvidia has long been known for its prowess in developing top-notch graphics processing units (GPUs) that are the first choice among serious gamers. In 1999, the company pioneered the use of parallel computing in its chips, which allows them to run a multitude of mathematical computations simultaneously. By breaking up these massive compute jobs into smaller, more manageable pieces, the company reinvented the gaming industry. In fact, as recently as early 2022, gaming still represented the majority of Nvidia’s revenue. But a paradigm shift was coming.
It didn’t take long before Nvidia realized it could use this technology in a variety of other applications. By 2006, scientists and data researchers discovered that GPUs could be used for other computationally intensive processes, including high-performance computing (HPC), machine learning (a subset of AI), and data centers.
