Intel (INTC 4.82%) The stock fell Friday after reporting ugly third-quarter results, but its fourth-quarter outlook was better than expected. The celebration was short-lived, however S&P Global announced that rival after hours Nvidia would replace Intel in the Dow Jones Industrial Average (^ DJI 3.04%).

S&P Global said the move would provide more representative exposure to the semiconductor industry as the Dow Jones is a price-weighted index and Nvidia’s share price is much higher than Intel’s. In fact, Intel had the lowest share price of all 30 Dow stocks, meaning it had the least impact on the index. The measure will come into effect on Friday, November 8, when the index will also replace a chemical company Dow for Sherwin Williams for similar reasons.

Intel has been part of Dow since 1999, so this move ends the company’s 25-year run.

Shares of the chip stock sold off on the news, falling 1.8% in the after-hours session. The demotion from the Dow Jones does not have the same impact as the removal from the Dow Jones S&P500 That would be true, as only a few ETFs track the Dow Jones. However, it’s yet another unfavorable sign for Intel as it attempts what may be the biggest turnaround in its history.

The DJIA is updated as necessary and the managers aim to achieve a balanced selection of stocks across all sectors, based on the company’s reputation, history of sustained growth and investor interest. The Dow Jones does not change components often because S&P Global strives for stability. However, with Intel on the verge of being delisted, it’s worth taking a look at how previous components have fared after being removed from the Dow Jones.

The track record of Dow outcasts

Prior to this announcement was the last time the Dow Jones Industrial Average was rebalanced Amazon replace Walgreens Boots Alliance in February. That move came as Walgreens was seriously faltering and the index looked to increase its exposure to consumer retail.

WBA data by YCharts.

Since then, Walgreens has continued to struggle. As you can see in the chart above, the stock is down 55% since then, while the S&P 500 is up 13%. Based on these results, it appears the index manager made the right decision in dropping Walgreens.

The last changes in the Dow Jones before that came in 2020, when ExxonMobil, PfizerAnd RTX (formerly Raytheon) were removed from the index in favor of Salesforce, AmgenAnd Honeywell. The chart below shows how they have performed since being removed from the Dow Jones.

^SPX data by YCharts.

As you can see, that group of former Dow stocks has outperformed the broad market index, even though Exxon shares have soared as oil stocks fell sharply as oil prices plummeted during the pandemic. Before that, it was the last company to be removed from the Dow Jones General Electricwhich was replaced by Walgreens in 2018. GE split into three companies, GE Healthcare, GE AviationAnd GE Vernova earlier this year, but the stock, driven by CEO Larry Culp’s turnaround efforts, has been a winner since.

Finally, AT&T was the last stock in the past decade to be removed from the Dow Jones when it was ousted in 2015. Since then it has performed poorly with its share price down 12% as the telecoms market has been sluggish and has lost market share to T-Mobile.

^SPX data by YCharts.

A 2017 study found that stocks removed from the Dow Jones index initially have lower returns but perform better in the long term than stocks added to the index. However, this finding may not be as reliable.

What it means for Intel

Over the past decade, the performance of stocks leaving the Dow Jones has been mixed. Walgreens, Pfizer and AT&T have all underperformed the market, while Exxon, RTX and GE have beaten it.

The research showing the long-term outperformance of ex-Dow components should also be encouraging for Intel investors. Ultimately, the sample size of recent stocks is too small and varied to draw a clear conclusion. Intel’s future depends much more on its ability to execute its turnaround in the coming quarters than on its removal from the Dow Jones.

Investors in Intel should pay attention to the company’s cost-cutting initiatives, its upcoming 18A foundry process, and the artificial intelligence (AI) chips designed to keep up with Nvidia. If the company can make a comeback, it will likely start with those key initiatives.