Shares of Nvidia have experienced a significant surge in value since the company's strong first-quarter earnings report on May 22 and subsequent announcement of a 10-for-1 stock split. With the stock split set to take effect after hours on June 7, rumors are now circulating that Nvidia could potentially join the prestigious Dow Jones Industrial Average.

Investors have responded favorably to Nvidia's upcoming stock split, as such events are generally perceived as positive signs by the market. While stock splits do not directly impact a company's fundamentals, they often signal management's confidence in future share price growth. Additionally, stock splits make individual shares more affordable, increasing accessibility for retail investors.

The increasing bullish sentiment surrounding Nvidia's stock split has led some investors to believe that the company may replace Intel in the Dow Jones Industrial Average. The Dow Jones is a price-weighted index, and Nvidia's pre-split share price would have significantly skewed the index due to its high share price. However, with a post-split share price expected to range between $110 and $120, Nvidia's inclusion in the Dow becomes more feasible.

Intel's potential removal from the Dow can be attributed to its underwhelming performance in the semiconductor industry. While Intel has struggled to deliver sustained growth and has lagged behind the Dow Jones by a considerable margin over the past decade, Nvidia has emerged as a market leader in the sector. Nvidia's market cap of $2.8 trillion now surpasses Intel's $129 billion, further bolstering the case for its inclusion in the index.

Joining the Dow Jones Industrial Average would serve as a symbolic victory for Nvidia, solidifying its status as a blue chip tech stock. As the third most valuable company globally, after Apple and Microsoft, Nvidia's inclusion in the Dow would dispel any notions of its success being a passing trend or a bubble.

However, the impact on Nvidia's stock price from being admitted to the Dow is expected to be relatively minimal. Unlike the widely tracked S&P 500, the Dow is not heavily influenced by ETFs. Nevertheless, joining the blue chip index would provide a psychological boost to Nvidia and affirm its long-term prospects.

While reviews and rebalancing are infrequent for the Dow Jones, it is not surprising that Nvidia is being touted as a potential replacement for Intel given their respective performances in the semiconductor industry. The timing of such a decision, however, remains uncertain.

As the stock split approaches, Nvidia continues to demonstrate strong momentum, building anticipation as investors eagerly await news of its potential inclusion in the Dow Jones Industrial Average. The committee's decision would undoubtedly make waves in the market, further solidifying Nvidia's position as a top player in the tech industry.

Note: Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.