“NVIDIA” Multiplies 10 Times: Will It Become The Star of The “Dow Jones” Index?

The 10-for-1 division of Nvidia shares with the aim of attracting individual investors took effect. This raised speculation about the chances of the leading artificial intelligence company being included in the Dow Jones blue-chip index.

Global markets strategist at the brokerage firm “Digital eToro”, Ben Laidler, said: “One of the side effects of dividing (NVIDIA) shares is to put it in competition to track (Amazon) and (Apple) in the (Dow Jones) index, which may lead to pushing the company’s shares (Intel) is the company that currently has the lowest weight.”

The stock fell 0.2 percent on Monday, after rising about 27 percent since the company announced a stock split and strong outlook last month. The dominant artificial intelligence chip maker also achieved $3 trillion in market value last week, surpassing Apple to become the second most valuable company in the world, behind only Microsoft.

Market analyst at Triple D Trading, Dennis Dick, said about Nvidia shares: “Historically; “When we see such rallies before a stock split, there is often a negative impact afterward, and I expect some fatigue for buyers this week.”

Market analysts said stock splits tend to attract retail investors who trade smaller amounts and have less capital to deploy than institutional investors.

However, Goldman Sachs strategists led by David Kostin said in a note that most recent stock splits did not generate a significant increase in retail trading activity, but there were some notable exceptions such as the Amazon split in 2022 and the Nvidia split in Year 2021.

Furthermore, “investors typically assign higher valuations to liquid stocks due to lower trading costs and flexibility in a variety of market environments,” the strategists said.

Over the past several years, trading volumes have increased briefly after stock split announcements, but have seen little change during and after the splits took effect, according to a Goldman Sachs analysis of 45 stock splits in the Russell 1000 index since 2019.

Nvidia stock last traded at $120 per share after the split, compared to $1,200 on Friday, making it a potential competitor to the Dow Jones Index, which includes 30 companies and is weighted based on price.

A spokeswoman for the Standard & Poor’s – Dow Jones indices stated in late May that the company does not comment or speculate about additions or deletions from the index.