Effective at the start of trading on June 29, 2024, Alphabet Inc., the parent company of Google, will replace Verizon Communications in the 30-stock index.
Index Composition Change
S&P Dow Jones Indices, the organization that oversees the DJIA, announced on Tuesday that Alphabet's Class A shares (ticker: GOOGL) will be added to the index. Verizon Communications (ticker: VZ) will be removed. The change is scheduled to take effect before markets open on the specified date.
In a related change, Honeywell International (ticker: HON) will remain in the index following the completion of its aerospace business spin-off. The parent company will be renamed Honeywell Technologies. Honeywell Aerospace will not be added to the DJIA.
Rationale for the Change
S&P Dow Jones Indices stated that the inclusion of Alphabet is intended to reflect growing areas of the U.S. economy, specifically increasing the index’s exposure to sectors such as artificial intelligence, cloud infrastructure, and digital advertising.
Price Impact and Market Context
Following the announcement, Alphabet shares experienced an increase of approximately 1% in after-hours trading.
Alphabet has invested heavily in capital expenditures and research. According to reports, the company has raised $141 billion in debt and equity since October 2024 and has issued approximately $85 billion in shares to fund AI-related spending. Google Cloud sales growth has reportedly reaccelerated after integrating generative AI. Alphabet shares have recently faced some pressure due to the Federal Reserve's monetary policy stance and investor concerns over valuations.
On the day of the announcement, Alphabet closed at its largest single-day decline in over a year, underperforming the Nasdaq and other large-cap technology stocks.
Verizon's share price as of June 23 was $46.73, the second-lowest among DJIA components. Its influence on the index was 287.7 points out of approximately 51,667. Since joining the DJIA on April 8, 2004, Verizon's share price has increased by 39.5%, excluding dividends. Verizon shares are up approximately 14% year-to-date as of the announcement.
Index Background
The Dow Jones Industrial Average was established on May 26, 1896, with 12 industrial stocks. It has since undergone over 50 adjustments and now includes 30 multinational companies. Unlike the S&P 500 and Nasdaq Composite, the DJIA is price-weighted, meaning stocks with higher share prices have a greater influence on the index's overall movement.
Alphabet's Class A share price as of June 23 was $346.13, making it the sixth most influential component in the DJIA based on price weighting. Since its IPO in August 2004, Alphabet's stock has rallied approximately 13,700%.
Competing Narratives
Different sources have reported varying data regarding Alphabet's capital raising. Source 1 reported that Alphabet raised $141 billion in debt and equity since October 2024, while Source 3 reported approximately $85 billion in shares issued to fund AI spending. Both figures are presented here without confirmation of a single total.