According to an announcement made on Tuesday by S&P Dow Jones Indices, Amazon is set to replace Walgreens Boots Alliance in the Dow Jones Industrial Average, which is managed by the index provider and comprises 30 stocks measured by price-weight. In response, Amazon’s shares rose 1% in extended trading, while Walgreens’ stock dipped 3%.
This change is poised to increase the exposure of investors who track the Dow Jones Industrial Average to the online retail giant, Amazon, which contrasts with the broader S&P 500 index. The transition will officially take effect before the market opening on February 26.
In a statement, S&P Dow Jones Indices noted, “Reflecting the evolving nature of the American economy, this change will increase consumer retail exposure as well as other business areas in the DJIA.”
The decision to revise the index was influenced by Walmart’s 3-for-1 stock split, resulting in a reduced index weight for Walmart.
Today, Amazon transcends its origins as “the leading online retailer of books,” a label it held before its initial public offering in 1997.
Under the leadership of Andy Jassy since 2021, Amazon has expanded its presence, particularly in the cloud computing sector, which now commands a significant share of the market, contributing 14% of the company’s revenue and a substantial portion of its operating profit.
Jeff Bezos, Amazon’s founder, and its sole CEO before Jassy, currently serves as the company’s executive chair. Bezos ranked as the world’s second wealthiest person by some measures, has recently divested billions in Amazon stock.
In addition to its cloud services, Amazon generates revenue from advertising products featured in search results. The company’s advertising segment experienced a 27% revenue growth in the fourth quarter, outpacing Alphabet, Meta, and Microsoft.
Amazon’s inclusion in the Dow Jones Industrial Average follows the admission of business software maker Salesforce three years prior, along with Amgen and Honeywell International. Walgreens has been a constituent of the Dow since 2018, replacing GE, which had been part of the index since its inception in 1896.
In the most recent quarter, Walgreens reduced its losses to $278 million from $3.8 billion in the year-ago period, excluding non-controlling interests. Amazon, on the other hand, reported fourth-quarter earnings of $10.6 billion, a significant increase from $278 million in the same period.
