Intel (NASDAQ:INTC), one of the first tech giants to join the Dow Jones Industrial Average during the dot-com boom in 1999, is now facing the possibility of losing its place in the prestigious index, according to an article from Reuters on Tuesday.
The publication notes that the American chipmaker’s shares have slumped nearly 60% this year, making it the worst performer on the Dow and leaving it with the lowest stock price in the price-weighted index.
A potential removal from the Dow would be a significant blow to Intel’s already struggling reputation. The company missed out on the surge in artificial intelligence opportunities after opting not to invest in OpenAI, and its contract manufacturing unit, intended to compete with TSMC, has been suffering mounting losses, as reported by Reuters.
To finance a turnaround, Intel recently suspended its dividend and announced layoffs impacting 15% of its workforce, moves revealed during its last earnings report.
However, speaking to Reuters, some analysts and a former board member expressed concerns that these actions may be too little, too late.
Ryan Detrick, chief market strategist at the Carson Group, told Reuters that Intel being removed was likely a long time coming, with the company’s latest disappointing results potentially being the final push needed to see it ousted from the Dow.
The index’s selection committee makes changes as necessary, with the most recent adjustment occurring in February when Walgreens Boots Alliance (NASDAQ:WBA) was replaced by Amazon.com (NASDAQ:AMZN).
Unlike the S&P 500, which considers market value, stock price plays a crucial role in Dow inclusion. Currently, Intel is the least influential member of the index, with a weight of just 0.32%, according to Reuters.
Exclusion from the Dow would likely exacerbate Intel’s struggles, further impacting its shares.