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NVIDIA (NASDAQ:NVDA) shares will split 1-for-10 after the close of trading on Friday, dropping the price to around $100.
If the price falls, the Dow Jones Industrial Average (DJI) (NYSEARCA:DIA), this is still The index that most people think of as the gauge of Wall Street.
As a price-weighted index, Nvidia’s daily price fluctuations make it impractical to include it in the 127-year-old index, but after the split, it would be the best candidate to increase AI’s weighting in the Dow as it tries to catch up with the S&P 500 (SP500).NYSEARCA:Spy) (IVV) (VOO).
The S&P is up more than 26% over the past year, and the Dow has followed suit, rising nearly 18%.The Dow’s only AI exposure is Microsoft (MSFT).
Amazon (AMZN) “got included after its stock split, but Nvidia is one of the largest companies in the world by market cap, so something similar could happen after the upcoming NVDA stock split,” said Jonathan Weber, head of the investment group.
Amazon is classified as a consumer discretionary (XLY) stock, but the Dow Jones Industrial Average increased its exposure to technology stocks while dumping Walgreens Boost Alliance (WBA).
But in the case of NVIDIA, its chip stocks are likely to replace Intel’s chip stocks (Nasdaq:INTC) index is coming to an end after nearly 25 years on the index.
Intel was added shortly after its 2-for-1 stock split in November 1999, at the height of the dot-com boom. Microsoft, SBC Communications, and Home Depot (HD) also joined the 1999 class, replacing Union Carbide, Sears, Chevron (CVX), and Goodyear (GT).
Intel has fallen about 30% over the past five years and, adjusted for stock splits, is up about 30% since it joined the Dow Jones Industrial Average. Its stock price will be around $30, making it the least affected stock on the index. Nvidia will be around $110 after the split, putting it in the bottom third.
“If NVIDIA is included in the Dow Jones index, it could lead to forced buying by ETFs that mimic the index, which could have a positive impact on NVIDIA’s stock price,” Weber said. “But overall, I don’t think we should over-interpret the impact of the stock split. I don’t think it will be a game-changer for the company.”
The original Dow Jones Industrial Average’s 11 stocks opened at 40.94 points. GE was the last stock to drop out of the index, being replaced by Walgreens in 2018.
