Alphabet, Google's parent company, officially joined the Dow Jones Industrial Average yesterday. It replaced Verizon and earned a seat alongside some of the biggest names in corporate America. On the surface, it sounds like a major victory. And in many ways, it is.
But there is also a big catch. The same company that has just entered the blue chip index is currently experiencing its worst month in more than a year.
WHAT HAPPENED?
Last Tuesday, S&P Global announced that Alphabet would be added to the Dow Jones Industrial Average. The change officially took effect at the start of yesterday's trading session.
Google now sits alongside technology giants such as Nvidia, Amazon, Apple, and Microsoft. According to S&P Global, adding Alphabet gives the Dow greater exposure to artificial intelligence, cloud computing, and digital advertising, which are some of the most important themes shaping today's market.
Investors welcomed the news. Following Tuesday's announcement, the stock gained about 1%. Then, on the first official trading day as a Dow component, it climbed another 4.9%.
So why was Verizon removed?
The answer is simple. The Dow is a price weighted index, meaning each company's influence depends on its share price rather than its total market value. Stocks with higher share prices have a greater impact on the index. Verizon's relatively low share price meant it contributed only a tiny fraction of the Dow's overall weighting, making its influence minimal.
As impressive as joining the Dow may sound, the move is more symbolic than transformational.
Alphabet was already a member of both the S&P 500 and the Nasdaq 100, which are followed by the vast majority of index funds. That means joining the Dow does not trigger a significant wave of mandatory buying from passive investors. Instead, it is more of a badge of honor than a game changing event.
There is also an interesting historical pattern worth mentioning. The most recent companies added to the Dow, including Nvidia, Salesforce, and Apple, all traded lower sixty days after joining the index. That does not necessarily mean the same thing will happen to Alphabet, but it does show that inclusion alone is far from a guarantee of future gains.
THE SHADOW BEHIND THE GOOD NEWS
The timing of this milestone is especially interesting because Google is going through a difficult period in the stock market.
Even after Monday's 4.9% rally, the stock is still on track for its worst monthly performance since February of last year. Six of the past seven weeks have ended in negative territory. What's remarkable is that only a few months ago, in May, Alphabet briefly surpassed Nvidia to become the world's most valuable publicly traded company. In just a matter of weeks, the picture has changed dramatically.
So what is driving the weakness?
Investors are increasingly questioning whether Google's enormous spending on artificial intelligence will ultimately generate the returns they expect. At the same time, lower cost Chinese AI models continue to improve rapidly. DeepSeek has already announced that the next version of its model is expected within the next two weeks. That creates additional pricing pressure just as Google is trying to build a profitable business around Gemini.
The company is also facing talent challenges. Noam Shazeer, the former head of Gemini, left for OpenAI, reportedly citing limited access to computing resources as one of the reasons. Access to computing power has become a growing problem. Reports suggest Alphabet does not currently have enough capacity to fully meet demand from major enterprise customers such as Meta, forcing it to seek additional computing resources from outside providers, including SpaceX.
The financial impact is beginning to show as well. The company's cash cushion has declined, and for the first time in nearly a decade, Alphabet did not repurchase shares during the first quarter. Since October, it has also raised more than $140 billion through debt and other financing as the AI race becomes increasingly expensive.
To be fair, however, the situation is not entirely negative. Despite the recent volatility, the stock remains up more than 10% so far in 2026 and is on track for its fourth consecutive year of gains. So while the challenges are real, the long term picture is far from hopeless.
