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Nvidia (NASDAQ:NVDA) shares started trading on a split-adjusted basis on Monday, fueling speculation that the artificial intelligence leader may be considered for inclusion in the blue-chip Dow Jones Industrial Average (DJI).
Its market cap also reached $3T, edging out Apple (AAPL) to be the second most valuable listed company. Apple’s market cap is $2.96T, while that of Microsoft (MSFT) – the most valuable – is $3.18T.
Nvidia (NVDA) investors received 10 shares for each one they already own in the stock split, without any dilution of equity. “A side effect of Nvidia’s stock split will be to put it in the running to follow Amazon (AMZN) and Apple (AAPL) into the price-weighted Dow index, potentially pushing out fellow chip stock Intel (INTC) that currently has the lowest weighting,” multi-asset trading platform eToro recently noted.
Amazon (AMZN), which was added to the Dow (DJI) earlier this year, also saw similar speculation over its inclusion to the index after its 20-to-1 stock split back in 2022.
However, the methodology for Dow (DJI) inclusion is fairly vague – a stock is added to the index “only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”
Two representatives from The Wall Street Journal and three from S&P Global decide on potential inclusions, after evaluating stock prices, corporate actions, and whether the company helps the index maintain desired exposure to the relevant sector.
“Adjustments to the emblematic DJIA index are few and far between, and others such as Alphabet (GOOG) (GOOGL) may be ahead of Nvidia (NVDA) in the queue,” said eToro.
After the stock split took effect on Monday, Nvidia (NVDA) fell as much as 3.2% to $117.01/share, before ending 0.8% higher at $121.79/share.
Nvidia’s (NVDA) shares have climbed 28% since the AI darling announced the stock split along with its Q1 earnings that smashed Wall Street expectations.