Amazon Joins Dow Jones Industrial Average, Replacing Walgreens

In a recent announcement by S&P Dow Jones Indices, it was revealed that Amazon will be stepping into the shoes of Walgreens Boots Alliance in the Dow Jones Industrial Average. This change, effective Feb. 26, has already set the stocks in motion, with Amazon shares inching up by 1% in extended trading, while Walgreens saw a 3% dip.

For investors, this move means a shift in exposure toward the online retail giant within the Dow Jones Industrial Average, a basket of 30 stocks that offers a glimpse into the broader market. With Amazon’s diversified business areas, including its dominant cloud segment, investors are poised to gain more insight into consumer retail trends.

The decision to replace Walgreens was attributed in part to Walmart’s recent 3-for-1 stock split, which altered the index weight for the retail behemoth. S&P Dow Jones Indices noted that this change reflects the evolving landscape of the American economy.

Amazon’s transformation over the years has been remarkable. What once started as an online bookstore has now evolved into a multifaceted empire under the leadership of Andy Jassy. Jassy’s stewardship saw the exponential growth of Amazon’s cloud business, which now accounts for a significant portion of the company’s revenue and operating profit.

Jeff Bezos, the visionary founder of Amazon, has passed on the CEO baton to Jassy but remains actively involved as the executive chair. Despite relinquishing the CEO title, Bezos continues to hold sway over the company’s direction, evident in recent stock sales worth billions.

Beyond its core e-commerce and cloud businesses, Amazon has been expanding into advertising, with its advertising arm witnessing impressive revenue growth, outpacing tech giants like Alphabet, Meta, and Microsoft.

Amazon’s inclusion in the Dow Jones Industrial Average marks a significant milestone, following similar moves by other tech-savvy companies like Salesforce in recent years. Meanwhile, Walgreens, a Dow component since 2018, is bowing out after a relatively short stint. It originally replaced General Electric, a Dow stalwart since the index’s inception in 1896.

Financially, the contrast between the two companies is stark. While Walgreens has been grappling with losses, Amazon’s latest earnings report showcases its robust performance, with fourth-quarter earnings soaring to $10.6 billion.

As Amazon steps into its new role in the Dow, investors will undoubtedly keep a close eye on how this shift shapes the trajectory of the index and reflects broader market dynamics.