Amazon will replace Walgreens in the Dow Industrial Average next week

Amazon will replace Walgreens Boots Alliance in the Dow Jones Industrial Average, according to a Tuesday announcement from S&P Dow Jones Indices, which manages the price-weighted measure of 30 stocks. Amazon shares were up 1% in extended trading, and Walgreens shares were down 3%.

The move will give more exposure to the online retailer for investors betting on the average, which is much lower than the S&P 500 index. The change takes effect before the market opens on February 26.

“Reflecting the evolving nature of the US economy, this change will increase exposure to consumer retail as well as other business areas in the DJIA,” S&P Dow Jones Indices said in a statement.

The company said the revision was “triggered” by Walmart’s 3-for-1 stock split, resulting in a lower weighting in the index for Walmart.

Today’s Amazon is more than “the leading online book retailer,” as the company described itself to investors before its initial public offering in 1997. As of 2021, it’s run by Andy Jassy, ​​who built Amazon’s cloud business. This segment is the market leader, giving Amazon 14% of revenue and the majority of operating profit.

Jeff Bezos, Amazon’s founder and sole CEO before Jassy, ​​is the company’s executive chairman. The second richest person in the world based on one measurementBezos has unloaded billions in stock in recent weeks.

Beyond the cloud, there is revenue that comes from promoting Amazon products in search results. Amazon’s advertising business delivered revenue growth of 27% in the fourth quarter, faster than Alphabet, Meta and Microsoft.

Amazon’s arrival in the Dow Jones comes three years after business software maker Salesforce joined, along with Amgen and Honeywell International.

Walgreens has been a Dow component since 2018, when it replaced GE, which had been part of the stock group since its inception in 1896.

Last quarter, Walgreens narrowed its losses to 278 million dollars from $3.8 billion in the year-ago quarter, excluding noncontrolling interests. Amazon’s fourth-quarter earnings hit $10.6 billionof $278 million.

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