Verizon will be replaced by Alphabet in the Dow Jones Industrial Average on June 29, 2026, marking the end of Verizon's 25-year tenure in this prestigious index. This change is significant as it reflects a shift towards companies with greater exposure to artificial intelligence, cloud computing, and digital advertising.
Historical data indicates a phenomenon known as the 'Curse of the Dow,' where companies removed from the index tend to outperform those that replace them. For instance, out of the last seven changes since 2015, five of the removed stocks outperformed their replacements within a year.
Currently, Verizon's stock has increased by only 7.5% over the past year, while Alphabet's shares have doubled, and the Dow itself has risen over 20%. The reasons behind this trend may include the tendency for newly added companies to experience overvaluation and for removed companies to be undervalued due to their prior struggles.
A recent example is Intel, which was replaced by Nvidia in 2024; Intel's stock surged by approximately 400% after its removal, while Nvidia's growth was more modest. Research supports the idea that stocks removed from major indexes can outperform those added, although some studies have shown mixed results.
Overall, Verizon's upcoming exclusion from the Dow could present a favorable investment opportunity if historical patterns hold true