Alphabet, Google's parent company, will be added to the Dow Jones Industrial Average starting on the 29th.
S&P Global said on the 23rd (local time) that Verizon Communications Inc. will be removed from the Dow Jones Industrial Average, which consists of 30 leading U.S. blue-chip stocks, and Alphabet (Class A) will be newly added.
With this, Alphabet joins other big tech corporations such as Nvidia, Amazon, Apple, and Microsoft (MS) in earning a spot on the flagship U.S. blue-chip index. S&P Global explained the rationale, saying, "Alphabet's inclusion will help increase the Dow's exposure to growth areas such as artificial intelligence (AI), cloud infrastructure, and digital advertising."
Alphabet is aggressively ramping up investment to strengthen its AI competitiveness. Since October last year, the company has raised a total of $141 billion (about 216 trillion won) through bond and stock offerings, and is working to build an integrated AI ecosystem that spans its in-house AI chips represented by tensor processing units (TPUs), as well as cloud and search.
However, the recent share price trend is mixed. Alphabet's stock has risen about 10% so far this year, but on the 23rd it posted its biggest drop in about a year on concerns over AI talent departures.
S&P Global said Verizon Communications Inc. was replaced by Alphabet due to Verizon's weak share price. Because the Dow is a price-weighted index, stocks with higher per-share prices have a greater impact on the index. S&P Global said, "Verizon's low share price means it is not having a meaningful impact on the index," noting that "its weight in the index was just 0.5%."