Last month, the iconic Dow Jones Industrial Average (^DJI 0.09%) celebrated its 130th birthday. Since its official inception on May 26, 1896, the Dow has undergone more than 50 adjustments. What was a 12-stock, industrial-focused index in the late 19th century is now composed of 30 diverse, multinational businesses.
On June 29, before trading commences, another major change will be made. Telecom titan Verizon Communications (VZ +3.02%) will be removed from the Dow, with virtual monopoly and trillion-dollar club member Alphabet (GOOGL 0.85%)(GOOG 0.61%) taking its place. Specifically, Alphabet’s Class A shares (GOOGL) will join the index.
Image source: Getty Images.
Verizon’s two flaws made it expendable
Unlike the benchmark S&P 500 (^GSPC 1.44%) and tech-focused Nasdaq Composite (^IXIC 2.21%), which are both market-cap-weighted indexes, the Dow Jones Industrial Average is weighted by share price. For example, even though Nvidia is the largest publicly traded company ($4.85 trillion market cap), it’s $200 share price makes it only the 19th most influential component within the Dow.
Verizon’s first irrefutable flaw is that it boasted the second-lowest share price in the Dow at $46.73 (as of June 23). Based on the current Dow divisor, Verizon is only responsible for 287.7 Dow points. For reference, the Dow Jones Industrial Average closed at roughly 51,667. It simply didn’t have much sway within the index.
Today’s Change
(3.02%) $1.37
Current Price
$46.73
Key Data Points
Market Cap
$189B
Day’s Range
$45.40 – $46.85
52wk Range
$38.39 – $51.68
Volume
23M
Avg Vol
24.3M
Gross Margin
45.50%
Dividend Yield
6.10%
The other issue is that S&P Dow Jones Indices, the committee responsible for making adjustments to this time-tested index, favors companies that are representative of the U.S. economy and are long-term winners.
Since Verizon was added to the Dow on April 8, 2004, its shares have gained only 39.5%, excluding dividends. Verizon has held the Dow back, which will no longer be the case after this week.
Image source: Getty Images.
Virtual monopoly Alphabet joins its trillion-dollar peers in the Dow
Even a blind squirrel finds a nut once in a while: the removal of Verizon for Google parent Alphabet is a move I forecasted in January. On Monday, it’ll join other trillion-dollar peers in the iconic Dow, including Nvidia, Microsoft, and Amazon.
Alphabet offers a harmonious blend of tech and communications, highlighted by its virtual monopoly in internet search. Google accounts for approximately 90% of global internet search traffic, according to GlobalStats, affording Alphabet exceptional ad pricing power and closely tying the company’s fortunes to the U.S. economy. It’s also the parent of streaming platform YouTube, the second-most-visited social site on the planet, behind Google.
Google’s $GOOGL Cloud Backlog is growing exponentially. It nearly doubled in the most recent quarter and is expected to continue growing at a brisk pace…
Maybe the best segment of the Google empire. pic.twitter.com/QBO2eC0Hf3
— Just a Dude Who Invests (@DudeWhoInvests) June 21, 2026
However, Alphabet’s long-term growth story is dependent on artificial intelligence (AI) applications. Since integrating generative AI and large language model solutions into its prized cloud infrastructure service platform, Google Cloud, sales growth for this high-margin segment has reaccelerated in a big way.
Alphabet also resolves Verizon’s low share price and underperformance issues. At $346.13 per share, Alphabet’s Class A shares will slot in as the sixth most influential Dow component. It’s also rallied by nearly 13,700% since its IPO in August 2004 (about four months after Verizon joined the Dow).
On Monday, June 29, the Dow Jones Industrial Average will change forever, with Google parent Alphabet claiming a much-deserved spot in this time-tested index.
