Nvidia replaces Intel on S&P Dow Jones index

The GPU maker replacing the latter on the Dow Jones Industrial Average marks a historic event for an American tech icon. Intel was on the index for 25 years

By Harichandan Arakali Forbes India Staff

Published: Nov 11, 2024 12:27:47 PM IST

Updated: Nov 11, 2024 01:38:26 PM IST

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The change reflects the stunning rise of the GPU maker Nvidia on the back of demand for those chips for their ability as AI (artificial intelligence) accelerators. Image: Shutterstock

When the S&P Dow Jones Indices made significant changes to the Dow Jones Industrial Average and Dow Jones Utility Average (DJIA), effective November 8 in the US, one change that stood out was that Nvidia replaced Intel in the blue-chip DJIA.

The change reflects the stunning rise of the GPU maker Nvidia on the back of demand for those chips for their ability as AI (artificial intelligence) accelerators. The change also marks a historic end of an era for Intel that’s yet to offer a serious competing product.

This change removed Intel from the index after a 25-year reign. Intel’s latest quarterly earnings results that came out on October 31 led to some investor optimism that the company may yet be able to regain some of the manufacturing edge and the market share it’s lost in recent years.

However, initial projections for Intel’s vaunted AI chip, called Gaudi, showed it wasn’t getting the traction the company had hoped for. And CEO Pat Gelsinger confirmed the company wouldn’t be meeting its first $500 million target in Gaudi sales. “We will not achieve our target of $500 million in revenue for Gaudi in 2024,” he told analysts and investors on the company’s fiscal Q32024 earnings call. “The overall uptake of Gaudi has been slower than we anticipated as adoption rates were impacted by the product transition from Gaudi 2 to Gaudi 3 and software ease of use.”

He added that Gaudi 3, the next iteration of the company’s AI accelerator chip, was seeing strong interest. Gaudi 3 delivers twice the networking bandwidth and 1.5x the memory bandwidth of its predecessor for large language model efficiency, according to Intel’s earnings press release of October 31.

Gelsinger is putting Intel through urgent, painful change, including a 16,500 layoff to turn it around. He’s also committed the company to an investment of more than $32 billion to build two new leading-edge chip factories and to modernise an existing fab. The company expects to make its own chips and also take in orders from other semiconductor companies at these factories.

This will take time, perhaps as much as two years. In the meantime, the company, an American tech icon that contributed to Silicon Valley getting that name, is today facing a potential break up with rivals such as ARM and Qualcomm interested in acquiring some or all of it, according to various news reports.

AMD, the other GPU maker that like Nvidia also has a heritage of providing chips that computer gamers love, is seeing its AI accelerator chip gaining strong traction. AMD’s data centre revenues, including sales of its Instinct series of GPUs and EPYC CPUs, more than doubled to $3.55 billion in its latest September quarter from $1.6 billion for the year-ago period.

Gelsinger is hoping that the future will bring greater balance between the data centre computing and on-device applications, such as on the new wave of AI laptops, where Intel remains a strong player.

Also read: Will Nvidia's AI gold rush continue?

Future: AI workers everywhere

For now, Nvidia dominates as the undisputed leader of AI accelerator chips with large businesses worldwide building their AI plans around these products, including Indian conglomerates Reliance and Tata and software company Zoho.

Nvidia’s co-founder and CEO Jensen Huang is convinced that digital and ‘AI employees’ will become a reality, working alongside human employees in businesses and various organisations. He made this point in an interview with the podcast No Priors that was published on November 7.

Huang has become one of the most recognised faces of AI with Nvidia becoming the dominant supplier of the semiconductor chips that power the accelerated computing that large language models rely on. “There’s no question we’re gonna have AI employees of all kinds,” Huang said.

“Our outlook will be some biologics and some AI intelligence and we’ll prompt them in the same way, isn’t that right? Mostly I prompt my employees, provide them context… they go and recruit other team members… how’s that going to be any different with digital and AI employees of all kinds?”

We can expect to find AI marketers, chip designers, supply chain specialists and a host of other digital workers, he said.