**Nvidia Joins the Dow Jones Industrial Average, Shaking Up the Index**

In a significant move, Nvidia is set to join the prestigious Dow Jones Industrial Average this Friday, bringing an end to months of speculation that kicked off in May when the renowned chipmaker executed a 10-to-1 stock split. This development marks a new chapter for Nvidia, which has rapidly risen to become one of the world's largest companies amid the growing prominence of artificial intelligence.

Over the last couple of years, Nvidia's ascent in the corporate world has been meteoric, even surpassing Microsoft in market capitalization and contending with Apple for the top spot in both the S&P 500 and the tech-heavy Nasdaq 100. The Dow Jones, being a price-weighted index, will integrate Nvidia’s stock, making it the 21st most expensive in the index. The transition will see Intel exit the Dow, where its shares were comparatively low-priced at just over $23.

In the Dow Jones Industrial Average, share price is the primary factor determining a stock's impact on the index, rather than market capitalization. For instance, UnitedHealth, with its share price exceeding $567, frequently exerts the largest influence on the index, alongside Goldman Sachs, whose shares are valued above $500. In contrast, a $1 change in Nvidia’s stock will reflect a 0.74% change, but ultimately it affects the Dow by the same 6.6 points as any other stock's dollar move.

It's also crucial to consider volatility in assessing a stock's potential influence. Based on a CNBC analysis using FactSet data, Nvidia is projected to be the eighth-largest influence on the Dow when looking at both its share price and its recent volatility. Despite its relatively modest share price, Nvidia's inherent volatility compensates, leading to an expected daily move around $4.40. This positions Nvidia between Amgen and American Express in terms of daily volatility, despite those companies’ higher share prices.

This scenario underscores some limitations of price-weighted indexes like the Dow. Nvidia, a critical player in the current market landscape, might not have made it to the Dow before splitting its stock. While share price used to be a significant criterion, the advent of fractional trading and exchange-traded funds (ETFs) has made it less relevant, except in specific contexts such as options trading and the Dow Industrials.