Nvidia (NASDAQ: NVDA) stock investors got some good news to kick off their weekends. On Friday after the market close, S&P Dow Jones Indices announced that the artificial intelligence (AI) chip giant will replace fellow chipmaker Intel (NASDAQ: INTC) in the Dow Jones Industrial Average (DJINDICES: ^DJI), the oldest U.S. stock index.

Not surprisingly, Nvidia stock was up and Intel stock was down in Friday’s after-hours trading session. Nvidia stock gained 2.9% while Intel stock lost 1.9%.

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Nvidia is replacing Intel in the Dow Jones Industrial Average (commonly called “the Dow”) before the market open on Friday, Nov. 8.

Intel has been a member of the Dow since 1999, as it was added in its glory days in the dot-com era.

Nvidia is replacing Intel in the Dow index to “ensure a more representative exposure to the semiconductors industry,” the S&P Dow Jones Indices said in its press release.

This makes good sense as Nvidia’s whopping $3.39 trillion market cap makes it the second largest stock trading on a U.S. exchange, trailing leader Apple by a slim margin. Meanwhile, Intel’s market cap is $99 billion — just 1/34th the size of Nvidia’s. More to the point, Nvidia is much more representative than Intel of the current U.S. tech environment because it is the biggest player in supplying chips and related technology to enable AI capabilities.

As background, the Dow Jones Industrial Average is a 30-large stock index that aims to be representative of the U.S. stock market, which in turn is generally a reflection of the U.S. economy. So, in the early decades of its history — it was launched in 1896 — it was primarily composed of heavy industrial and energy stocks. In recent decades, technology stocks have been being added to the Dow, as they have become increasingly dominant in the U.S. stock market.

Three of the so-called “Big Techs” — the largest technology companies trading on U.S. stock exchanges — Amazon, Apple, and Microsoft — are current components of the Dow.

The Dow stock index is price-weighted, which means that each of its 30 components receives a weighting based on its price. So, stock components that are trading at higher prices affect the Dow’s performance more than those that are trading at lower prices.

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