Dow Jones Industrial Average dey celebrate 130 years, but di index don change well well. Now e full of tech stocks like Salesforce, Amazon, and Nvidia. But one kain problem: communications stocks like Alphabet get only 2% weight for Dow, whereas for S&P 500 e be 11%. Dis imbalance fit make Dow add Alphabet for June.
Unlike S&P 500 wey dey use market cap, Dow dey price-weighted. So di heaviest stocks no necessarily be di most valuable. For example, 16 of Dow 30 components dey heavier than Nvidia, even though Nvidia be di world most valuable company. Stock splits dey cause Dow shake-ups. Apple 2020 split bring Salesforce, Amgen, and Honeywell. Sherwin-Williams, Amazon, and Nvidia splits for 2021, 2022, and 2024 also bring dem inside.
Alphabet do stock split for 2022, so e fit enter Dow without causing wahala. Honeywell, wey join for 2020, don underperform since. E don spin off advanced materials for October 2025 and go spin off Honeywell Aerospace for June 29. Dis make Honeywell likely to leave Dow. Enter Alphabet, wey get AI, YouTube, Google Cloud, quantum computing, Waymo, and more.
Alphabet dey near $5 trillion club, only Nvidia don reach. Despite price tripling for last year, e still be value. Investors fear Google Search go lose market share to AI tools, but Alphabet don succeed with AI features for search and Gemini LLM. Google Cloud dey lead for custom chip design, like eighth-generation TPU chips. Dis reduce dependence on Nvidia and generate revenue from selling TPUs.
Alphabet get unique balance: free cash flow from Google Search and YouTube dey fund investments across AI value chain. E no dey bargain bin, but e still good value for long-term investors. Dow go likely add am soon.
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