Alphabet, Google’s parent company, joined the Dow Jones Industrial Average on Monday, taking the spot previously held by Verizon Communications, which has held that position since 1984.
The move validates that advertising and artificial intelligence (AI) are considered foundational to businesses. Google’s focus is on AI, and it is expected to give the Dow more exposure to
companies focused on the technology.
The Dow represents the changing face of the U.S. economy. Index managers stated that the modern communication-services sector is no longer accurately
reflected by a traditional telecom utility carrier, and required an internet leader considered as a backbone to industry.
S&P Global announced that Alphabet would replace Verizon in the
Dow Jones Industrial Average on June 23, 2026, a change that became effective today.
The decision to drop Verizon after 22 years on the Dow index came down to two major reasons,
according to reports.
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A company’s influence on the index is determined by its single-share price.
Unlike other major market indexes such as the S&P 500, which measures
companies by total market capitalization, the Dow is a price-weighted index, The Motley Fool explains.
Amazon, Apple, Microsoft, and Nvidia are other companies on the Dow.
Only
Alphabet’s Class A shares, GOOGL, are included in the Dow, while its Class C shares, GOOG, remain separate, reported Kipling on Friday.
“Adding Alphabet will broaden and strengthen the DJIA’s
exposure to these dynamic areas of the U.S. economy,” S&P Global stated in a press release last week. “Its larger market
capitalization and share price, together with the breadth of its businesses, make it a more representative Communication Services constituent in the DJIA.”
The S&P Global also called out
Alphabet’s diverse technology and digital services that will broaden and strengthen exposure to areas supported by the U.S. economy such as advertising, cloud infrastructure, AI, hardware, mobile,
healthcare technology and media distribution.
The Wall Street Journal reported that Alphabet may
give the Dow index more AI exposure, but it will likely not be as much as many think.
“Under the Dow’s methodology, higher-priced stocks are given more weight, meaning the Google parent will make up 4% of the index when it joins on Monday, while Goldman
Sachs and Caterpillar make up more than 10% each,” the WSJ reported. “If the Dow were market-cap weighted, as is the case for other benchmarks like the S&P 500 and Nasdaq composite,
Alphabet would be in the top three, while Caterpillar and Goldman would be way behind in the 11th and 17th spots, respectively.”
