Standard & Poor's Dow Jones Indices announced on Friday local time that NVIDIA will replace Intel next week, joining the Dow Jones Industrial Average index. This move highlights the prosperity of AI and the significant transformation in the semiconductor industry.

Intel used to be a dominant force in the chip manufacturing industry, but in recent years it has ceded its manufacturing advantage to its competitor Taiwan Semiconductor. Meanwhile, Intel also missed out on the boom of generative AI, including giving up an investment in ChatGPT's owner OpenAI.

This year, Intel's stock price has fallen by 54%, making the company the worst-performing and lowest-priced company in the Dow. Reports in early September suggested that Intel was likely to be removed from the Dow. In after-hours trading on Friday, Intel's stock price fell by 1.6%, while NVIDIA's stock price rose by 2.2%.

Adam Sarhan, founder of investment research firm 50 Park Investments, said: "Intel has lagged behind to a large extent. Now, the Dow is evolving. Obviously, you don't want to see stocks from 30 years ago, you want to see what the strongest stocks today are."

In contrast, NVIDIA has firmly grasped the huge business opportunities brought by the AI boom and has now become a cornerstone of the global semiconductor industry. This is mainly due to the important role its chips play in powering generative AI technology, driving NVIDIA's stock price to soar more than sevenfold over the past two years.

This year, NVIDIA's stock price has more than doubled. Previously seen only as a choice for PC gamers looking for graphics processors (GPUs), NVIDIA is now considered the barometer of the AI market.

Furthermore, the 10-for-1 stock split that took effect in June this year has paved the way for NVIDIA to join the Dow. The stock split makes high-priced stocks more accessible for retail trading.

Nvidia joining the Dow Jones proves the driving force of AI. In the past 24 months, Nvidia's stock price has risen by 900%. Scott Colyer, CEO of Advisor Asset Management, said: "Nvidia is a well-run company. Joining the Dow Jones at this time and place shows its strong rebound."

In the past two years, Nvidia has been a typical representative of the AI frenzy and the biggest driver of the stock market's rise. This week, Nvidia's market cap is $3.32 trillion, only about $50 billion lower than Apple. After-hours trading on Friday saw Nvidia's stock price rise by 3.2%. If this continues, Nvidia could soon surpass Apple again on Monday to become the world's most valuable company.

The Dow Jones Industrial Average consists of 30 companies and unlike the S&P 500 Index, it is weighted by individual stock prices rather than total market capitalization. This also means that stocks with higher prices have a greater impact on the index than those with lower prices.

In February of this year, Amazon was also added to the Dow Jones, replacing Walgreens Boots Alliance. Nvidia's inclusion in the Dow Jones will take effect on November 8th local time. Joining the Dow Jones along with Nvidia is paint manufacturer Sherwin-Williams, replacing chemical giant Dow.