Alphabet joins the Dow, stock jumps 4.1% on first day

Alphabet Inc. began trading as a member of the Dow Jones Industrial Average on Monday, replacing Verizon Communications in the 30-stock benchmark. Shares of the Google parent rose 4.1% in its first session as a Dow component.

Alphabet Inc. shares climbed 4.1% on Monday as the Google parent began its first trading day as a member of the Dow Jones Industrial Average, replacing Verizon Communications in the 30-stock benchmark.

"Adding Alphabet will broaden and strengthen the DJIA's exposure to these dynamic areas of the U.S. economy," S&P Dow Jones Indices said in a statement announcing the change last week. "Its larger market capitalization and share price, together with the breadth of its businesses, make it a more representative Communication Services constituent."

Alphabet's roughly $345 share price makes it the sixth-most influential component in the price-weighted index, accounting for about 4% of the Dow's weighting. Verizon, whose $45.68 share price represented just 0.5% of the index, ended a 22-year run in the Dow during which its shares gained only 36% excluding dividends. Alphabet, by contrast, has rallied nearly 13,700% since its August 2004 debut.

The addition marks a milestone for Alphabet, the world's second-most-valuable company with a market capitalization of about $4.22 trillion, and reflects the Dow's effort to better represent the technology-driven communication services sector. S&P Dow Jones Indices cited Alphabet's diversified portfolio spanning advertising, cloud infrastructure, artificial intelligence, hardware, autonomous mobility, healthcare technology and media distribution as key reasons for the selection.

Google commands about 90% of global search engine traffic, while its cloud platform, Google Cloud, posted 63% sales growth in the first quarter after integrating generative AI solutions. The index change, announced June 23, marks the first adjustment to the Dow since November 2024, when Nvidia and Sherwin-Williams replaced Intel and Dow Inc.

Unlike the S&P 500, which weights by market capitalization, the Dow is price-weighted, meaning Alphabet's influence at roughly 4% of the index is smaller than its 6% weighting in the S&P 500. Only one exchange-traded fund, the SPDR Dow Jones ETF with about $45 billion in assets, directly tracks the Dow, compared with nearly $3 trillion invested in S&P 500 funds.

This article is for informational purposes only and does not constitute investment advice.